Question

Jerry makes designer gloves at his workshop. He buys the cloth required for the gloves at $2.50 per glove He also buys stitching material at $0.50 per glove. He spends $400 per month to rent his workshop. He sells the gloves for $11 each. How many gloves does he need to sell to break even?

Answer 1

Answer:

50 gloves

Explanation:

The formula for breakeven point = Fixed cost/contribution margin per unit

Fixed cost =$400

contribution margin per unit = selling cost - variable cost

selling price = $11

variable cost per item = cloth at $2.50 + stitching $0.50 = $3.0

Contribution margin = $11 - $3 = $8

Break-even point = $400/$8

=50 gloves