A fabric manufacturer is doing a breakeven analysis of oilcloth.It costs $15.00 to manufacture a metre of oilcloth.Customers will pay $25 a metre for oilcloth.The company's fixed costs are $10,000.The fabric manufacturer must sell which of the following number of metres to break even?
A) 400
B) 667
C) 1,000
D) 10,000

Question

Quizplus · Accepted Answer

To break even, the manufacturer needs to cover both fixed and variable costs. The contribution margin per metre is $25 - $15 = $10. The breakeven point in metres is $10,000 / $10 = 1,000 metres.

A Fabric Manufacturer Is Doing a Breakeven Analysis of Oilcloth