As a graphic artist, Randy has just finished a new calendar. The calendar cost him $1.00 for the glossy paper, $3.00 for the six color production, and $.50 for the plastic wire that holds it together at the top. The labor in developing the design was 4 hours of work at $50/hour, and labor is being added to the rest of the fixed costs of $500.00. At a price of $15.00 per calendar, how many calendars will Nate need to produce and sell in order to break even (cover all his costs, but not make a profit)?
A) 670 calendars
B) 34 calendars
C) 46 calendars
D) 67 calendars

Question

Quizplus · Accepted Answer

Break-even point = total fixed costs ÷ (price per unit - variable costs per unit). In this case, BEP= $700 ÷ ($15.00 per unit - $4.50 per unit). BEP = 66.66 or 67 calendars. [Variable costs in this problem = $1.00 + $3.00 + $.50 = $4.50.]

As a Graphic Artist, Randy Has Just Finished a New