Lacey sells hand-knit scarves at the flea market.Each scarf sells for $50.Lacey pays $30 to rent a vending space for one day.The variable costs are $15 per scarf.What total revenue amount does she need to earn to break even?

Question

Quizplus · Accepted Answer

B) Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Contribution margin ratio = Contribution margin / Net sales revenue
Unit contribution margin = $50 - $15 = $35 per scarf
Contribution margin ratio = ($35 / $50) × 100 = 70%
Required sales in dollars = ($30 + 0) / 70% = $43

Lacey Sells Hand-Knit Scarves at the Flea Market