Lori sells hand-knit scarves at a flea market.Each scarf sells for $35.Lori pays $70 to rent a vending space for one day.The variable costs are $20 per scarf.How many scarves should she sell each day in order to break even?

Question

Quizplus · Accepted Answer

B) Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit
Unit contribution margin = Net sales revenue per unit - Variable costs per unit
Unit contribution margin = $35 - $20 = $15 per scarf
Required sales in units = ($70 + 0) / $15 = 5 scarves

Lori Sells Hand-Knit Scarves at a Flea Market