Question

Farris Billiard Supply sells all types of billiard equipment, and is considering manufacturing their own brand of pool cues. Mysti Farris, the production manager, is currently investigating the production of a standard house pool cue that should be very popu- lar. Upon analyzing the costs, Mysti determines that the materials and labor cost for each cue is $25, and the fixed cost that must be covered is $2,400 per week. With a selling price of $40 each, how many pool cues must be sold to break even

Answer 1

Answer:

Break-even point in units= 160 units

Explanation:

Giving the following information:

Unitary variable cost= $25

Selling price per unit= $40

Fixed costs= $2,400

To calculate the break-even point in units, we need to use the following formula:

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

Break-even point in units= 2,400 / (40 - 25)

Break-even point in units= 160 units