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miskamm [114]
3 years ago
13

A music company sells CDs for a particular artist. The company has advertising cost of $4,000 and recoding costs of $10,000; The

ir cost for manufacturing, royalties, and distribution are $5.50 per CD. They sell the CDs to Mage-Mart for $7.20 each
Mathematics
1 answer:
ki77a [65]3 years ago
6 0

Answer:

Instructions are below.

Step-by-step explanation:

Giving the following information:

Fixed costs= 4,000 + 10,000= $14,000

Unitary variable cost= $5.5

Selling price= $7.2

<u>To calculate the number of units to be sold to break-even, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 14,000 / (7.2 - 5.5)

Break-even point in units= 8,235 units

<u>In dollars:</u>

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 14,000 / (1.7/7.2)

Break-even point (dollars)= $59,294

<u>Now, imagine the company requires a profit of $50,000:</u>

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= 64,000/1.7

Break-even point in units= 37,647 units

Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio

Break-even point (dollars)= 64,000 / (1.7/7.2)

Break-even point (dollars)= $271,059

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ALRIGHT ARE YOU READY FOR EPIC MATH TIME?

because i know i am. so lets get this bread.

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