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ParkerParker sells homemade knit scarves for $ 14$14 each at local craft shows. Her contribution margin ratio is 62.562.5​%. ​Currently, the craft show entrance fees cost AthenaAthena $ 700$700 per year. The craft shows are raising their entrance fees by 2020​% next year. How many extra scarves will AthenaAthena have to sell next year just to pay for rising entrance fee​ costs? Begin by identifying the general formula to compute the breakeven sales in units. ( Fixed expenses + Operating income ) / Contribution margin per unit = Breakeven sales in units Athena will have to sell extra scarves next year just to pay for rising entrance fee costs.

Respuesta :

facundobuzzetti

Answer:

16 more scarves

Explanation:

Giving the following information:

Parker sells homemade knit scarves for $14 each at local craft shows. Her contribution margin ratio is 62.5%.

Contribution margin ratio= (Selling price - unitary variable costs)/ selling price

0.625= (14 - CVu)/14

5.25=CVu

To calculate the extra scarves we need to use the following formula:

break-even point (in units)= fixed costs/contribution margin

break-even point (in units)= (700*0.20)/(14-5.25)= 16 more scarves

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