Birdie's company will make a profit of $30,000 if she sells 3,000 gloves at the $15 price.
Step-by-step Solution:
Break even point= fixed cost/ selling price - variable cost
here the fixed cost is= $20,000
selling price= $15 and variable cost = $5
BEP= 20,000/ 15-5= 20,000/10= 2000 units
b. if they sell 3000 gloves, the contribution profit will be
total revenue= 3000*$15= $45,000
contribution= selling price- variable cost, 15-5= $10 per unit
the profit is= 3000*$10= $30,000
What is variable cost?
A variable cost is one that varies in relation to either the volume of production or the number of services provided. There should be no variable costs if no production or services are provided. Variable costs should rise in tandem with increases in production or services.
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