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Helen is considering adding a rack of greeting cards to her product offerings at Litton Books Unlimited. Her fixed costs associated with adding the greeting cards would be $300. Variable costs per card are $1 each. The greeting cards will sell for $2 each. Helen's break-even point would occur at ________ cards sold.

Respuesta :

Answer:

the break even point is 300 cards sold

Explanation:

The computation of the break even point in units is shown below:

= Fixed cost incurred ÷ contribution margin per unit

= $300 ÷ ($2 - $1)

= $300 ÷ ($1)

= 300 cards sold

As we know that the contribution margin per unit is

= Selling price per unit - variable cost per unit

And, the same is to be followed

Hence, the break even point is 300 cards sold

abiolataiwo2015

Helen's break-even point would occur at 300 cards sold.

Break even point= Fixed cost  ÷ Contribution margin per unit

Where:

Fixed cost=$300

Contribution margin per unit=$2-$1

Let plug in the formula

Break even point= $300/($2-$1)

Break even point= $300/$1

Break even point= 300 cards

Inconclusion Helen's break-even point would occur at 300 cards sold.

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