Question

a retail owner can but a certain clock at an average price of $53 per clock and sell them for an average price of $84 per clock. his fixed costs are $8000 per month and his variable cost is $5 per clock. (A) how many clocks must he sell each month to break even? (B) how many clocks must he sell to have a profit of $3000?

Answer 1

Answer:

  (A) 308 clocks

  (B) 423 clocks

Step-by-step explanation:

The contribution margin is the amount by which the selling price of the clock exceeds the cost of the clock. The contribution margin is used to figure the break-even point, and the amount of profit from sales.

  contribution margin = selling price - variable cost - purchase price

  contribution margin = $84 -5 -53 = $26

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(A)

To break even, the contribution margin from 'b' clocks must equal or exceed the owner's fixed cost:

  26b ≥ 8000

  b ≥ 8000/26

  b ≥ 307.7

The owner must sell 308 clocks each month to break even.

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(B)

To make a profit of $3000, the owner must sell enough clocks to cover the $8000 fixed cost and contribute an additional $3000. That is, the total contribution margin from selling p clocks must be about $3000+8000 = $11000.

  26p ≈ 11000

  p ≈ 11000/26 ≈ 423.08

The owner must sell about 423 clocks each month to earn a profit of about $3000.

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Additional comment

Selling 423 clocks will yield a profit of $2998.

Answer 2

Answer:

the answer is this

Step-by-step explanation:

To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin