A bicycle store costs $4500 per month to operate. The store pays an average of $65 per bike. The average selling price of each
bicycle is $155. How many bicycles must the store sell each month to break even?
1 answer:
Answer: 50 bicycles
Step-by-step explanation:
The breakeven quantity is the amount that must be sold to bring the profit to zero.
You can use the following formula to calculate it:
= Fixed cost / Contribution margin
Fixed cost= $4,500 per month to operate
Contribution margin = Selling price - Variable cost = 155 - 65 = $90
Breakeven = 4,500 / 90
= 50 bicycles
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