What is the breakeven point for Rough and Tough Clothiers, maker of heavy-duty dungarees? It has the following costs: $$\begin{array} { l l }
\text { Raw materials: } & \$ 15 \text { per pair } \
\text { Labor costs: } & \$ 8 \text { per pair } \
\text { Commissions: } & \$ 2 \text { per pair } \
\text { Utilities: } & \$ 50,000 \
\text { Rent: } & \$ 96,000 \
\text { Taxes: } & \$ 30,000 \
\text { Salaries: } & \$ 150,000
\end{array}$$ The price of the dungarees is $55 per pair.
A) 13,040
B) 10,867
C) 25,000
D) 17,650

Question

What is the breakeven point for Rough and Tough Clothiers, maker of heavy-duty dungarees? It has the following costs: $$\begin{array} { l l } 
\text { Raw materials: } & \$ 15 \text { per pair } \
\text { Labor costs: } & \$ 8 \text { per pair } \
\text { Commissions: } & \$ 2 \text { per pair } \
\text { Utilities: } & \$ 50,000 \
\text { Rent: } & \$ 96,000 \
\text { Taxes: } & \$ 30,000 \
\text { Salaries: } & \$ 150,000
\end{array}$$ The price of the dungarees is $55 per pair.
A) 13,040
B) 10,867
C) 25,000
D) 17,650

Quizplus · Accepted Answer

To calculate the breakeven point, we first determine the total fixed costs and the contribution margin per unit. Fixed costs are the sum of utilities, rent, taxes, and salaries, which equals $50,000 + $96,000 + $30,000 + $150,000 = $326,000. The variable costs per pair are the sum of raw materials, labor costs, and commissions, which equals $15 + $8 + $2 = $25. The selling price per pair is $55, so the contribution margin per pair is $55 - $25 = $30. The breakeven point in units is the total fixed costs divided by the contribution margin per unit, which is $326,000 / $30 ≈ 10,867 pairs.

What Is the Breakeven Point for Rough and Tough Clothiers