The fixed cost of Brendon Willows, a baseball bat manufacturing company, is $500,000 per year. The cost of wood and labor to manufacture one bat is $5. If the customers pay $25 to buy one bat, how many bats does Brendon Willows need to sell to breakeven?

Question

Quizplus · Accepted Answer

To breakeven, total revenue must equal total costs. Fixed costs are $500,000, and the variable cost per bat is $5. The selling price per bat is $25, so the contribution margin per bat is $25 - $5 = $20. To find the breakeven point: $500,000 / $20 = 25,000 bats.

The Fixed Cost of Brendon Willows, a Baseball Bat Manufacturing