Danny Company makes and sells stuffed animals. One product, Panda Bear, sells for $28 per bear. Panda Bears incur fixed costs of $100,000 per month and a variable cost of $12 per bear.
How many Panda Bears must be produced and sold each month to break even?
Break-even point is a financial analysis tool that is used to determine the level of revenue or number of units sold to recover the Fixed cost. This is usually computed by dividing the fixed cost by the difference between the selling price and variable costs.
Answer and Explanation: 1
Panda Bears must produce 6,250 units each month to break-even.
Step 1: Compute the contribution margin per unit.
- Contribution margin per unit =...
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fromChapter 5 / Lesson 28
See how to calculate break-even point (in units and dollars). See the variables of the break-even point formula and examples. Understand the purpose of break-even analysis.