Smithson Cutting is opening a new line of scissors for supermarket distribution. It estimates its fixed cost to be $ 450.00 and

Question

2 years ago

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Smithson Cutting is opening a new line of scissors for supermarket distribution. It estimates its fixed cost to be $ 450.00 and

its variable cost to be $ 0.50 per unit. Selling price is expected to average $ 0.75 per unit. a) For Smithson Cutting, the break-even point in units=(enter your response as a whole number).

Business

1 answer:

Whitepunk [10] · Answer 1 · 2021-12-07T03:48:55+03:00

Answer:

The break even point is 1,800 units.

Explanation:

Smithson Cutting is opening a new line of scissors for supermarket distribution.

The fixed cost is estimated to be $450.00 and its variable cost to be $0.50 per unit.

Selling price is expected to average $0.75 per unit.

Contribution margin per unit

= Sales - Variable cost

= $0.75 - $0.50

= $0.25

Break even point

= $\frac{Fixed\ costs}{Contribution\ margin}$

= $\frac{450}{0.25}$

= 1,800