Caty Couture sells designer shirts for $43 per shirt.It incurs monthly fixed costs of $7,000.The contribution margin ratio is calculated to be 20%.What is the breakeven point in units?

Question

Quizplus · Accepted Answer

D) Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Required sales in dollars = ($7,000 + 0) / 20% = $35,000
Number of units to be sold to break even = $35,000 / $43 = 814 shirts

Caty Couture Sells Designer Shirts for $43 Per Shirt