Ginny, a licensee, uses a preprinted contract in Tim's purchase of a new loft apartment. There is a discrepancy in the contract
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<h2><u>Answer</u>: Break-Even point ( in units)= Fixed Costs ÷ (Sales price per unit – Variable costs per unit) </h2>
Allison will have to sell 6 extra scarves next year just to pay for rising entrance fee costs.
<h2><u>Explanation</u>:</h2>Formula :
Break-Even point ( in units)= Fixed Costs ÷ (Sales price per unit – Variable costs per unit)
Given, Price of knit scarves = $25
Contribution margin ratio = 60%
Contribution margin per unit = (Price of knit scarves) x (Contribution margin ratio )
= $(25 x 0.60 )
= $15
Current entrance fees = $900
Percentage in increase in entrance fees = 10%
Increase in entrance fees = 10% of $900 = $90
Extra scarves to be sold
Allison will have to sell 6 extra scarves next year just to pay for rising entrance fee costs.