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GrogVix [38]
2 years ago
7

A retailer spends a $500 per month to keep its online shop active and updated. The store acquires shirts at a cost of $5 per shi

rt. Each shirt sells for a marginal benefit of $10 per shirt.
How many shirts would you have to sell for it’s marginal benefits to be greater than its total costs?
Business
1 answer:
Vesnalui [34]2 years ago
3 0

Answer:

100 shirts

Explanation:

Borrowing from the contribution margin concept, the level where the marginal benefit is greater than total costs is the break-even point.

Break-even point = fixed cost / contribution margin per unit.

For this retailer,

Fixed costs are $500,

The contribution margin per unit = selling price- variable cost

=$10-$5

=$5

Break-even point

= $500/$5

= 100units

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