Maywood Company sells hand-knit scarves..Each scarf sells for $25.The company pays $30 to rent a vending space for one day.The variable costs are $15 per scarf.What total revenue amount does the company need to earn to break even?

Question

Quizplus · Accepted Answer

To break even, the company needs to cover their fixed costs (vending space rental cost) and variable costs (cost of making each scarf). The contribution margin per scarf is ($25 - $15) = $10. To cover the fixed cost of $30, the company needs to sell at least 3 scarves ($30/$10). Therefore, the total revenue needed to break even is 3 x $25 = $75. The correct choice is B, $75.

Maywood Company Sells Hand-Knit Scarves