Sacramento Sandals (SS) has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information, the breakeven sales level in dollars is
A)$125,495
B)$112,425
C)$108,995
D)none of the above

Question

Quizplus · Accepted Answer

The breakeven point in units is calculated as Fixed Costs / (Selling Price per Unit - Variable Cost per Unit) = $75,000 / ($14.99 - $4.99) = 7,500 units. The breakeven sales level in dollars is then 7,500 units * $14.99 = $112,425.

Sacramento Sandals (SS) Has Fixed Annual Operating Costs of $75,000