Question

Smithson Cutting is opening a new line of scissors for supermarket distribution. It estimates its fixed cost to be $ 450.00 and its variable cost to be $ 0.50 per unit. Selling price is expected to average $ 0.75 per unit. ​a) For Smithson​ Cutting, the​ break-even point in units​=(enter your response as a whole​ number).

Answer 1

Answer:

The break even point is 1,800 units.

Explanation:

Smithson Cutting is opening a new line of scissors for supermarket distribution.

The fixed cost is estimated to be $450.00 and its variable cost to be $0.50 per unit.

Selling price is expected to average $0.75 per unit. ​

Contribution margin per unit

= Sales - Variable cost

= $0.75 - $0.50

= $0.25

Break even point

= $\frac{Fixed\ costs}{Contribution\ margin}$

= $\frac{450}{0.25}$

= 1,800