To produce chewing gum, DryFruit Gum Company pays $100,000 per year for rent on a long-term lease and $25 per kilogram for sorbitol and other ingredients.These are the only costs associated with making DryFruit Gum.During the year, the firm sold 30,000 kilograms of chewing gum at $45 per kilogram.Ignoring income taxes, the break-even point for DryFruit is:

Question

Quizplus · Accepted Answer

The break-even point in kilograms can be calculated by dividing the fixed costs by the contribution margin per unit. The fixed costs are $100,000 (annual rent). The contribution margin per unit is the selling price per kilogram minus the variable cost per kilogram, which is $45 - $25 = $20. Therefore, the break-even point is $100,000 / $20 = 5,000 kilograms.

To Produce Chewing Gum, DryFruit Gum Company Pays $100,000 Per