A company making tires for bikes is concerned about the exact width of its cyclocross tires. The company has a lower specificati
1 answer:
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Answer:
break-even point (BEP) = 25,000 items
Explanation:
given data
Selling price = $2.50
Fixed costs = $10,000
Variable cost = $2.10
solution
we know that Revenue is sum of Fixed costs and variable costs
so we use here contribution margin method that is
Contribution margin = $ 2.50 - $ 2.10
Contribution margin = $ 0.4
so
break-even point (BEP) for the valve is here
break-even point (BEP) = fixed cost ÷ Contribution margin ...................1
put here value
break-even point (BEP) =
break-even point (BEP) = 25,000 items