Reevis Company sells hand- sewn shirts for $25 per unit, and has fixed costs of $7 500. Their contribution margin ratio is 20%. How many units do they have to sell to break even?

Question

Quizplus · Accepted Answer

The contribution margin per unit is $25 * 20% = $5. To break even, fixed costs of $7,500 must be covered. Therefore, $7,500 / $5 = 1,500 units need to be sold to break even.

Reevis Company Sells Hand- Sewn Shirts for $25 Per Unit