Dream Threads Company sells hand-sewn shirts for $40 per shirt.It incurs monthly fixed costs of $7000.The contribution margin ratio is calculated to be 50%.What is the breakeven point in units? (Round your answer up to the nearest whole unit.)
A) 175 units
B) 3500 units
C) 80 units
D) 350 units

Question

Quizplus · Accepted Answer

Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Required sales in dollars = ($7000 + 0) / 50% = $14,000.00
Number of units to be sold to break even = $14,000.00 / $40 = 350 units

Dream Threads Company Sells Hand-Sewn Shirts for $40 Per Shirt