My Art sells framed art prints for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. Required: a. What is the contribution margin per print? b. What is the breakeven point in prints? c. How many prints must be sold to earn pretax income of $7,500?

My Art sells framed art prints for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. Required: a. What is the contribution margin per print? b. What is the breakeven point in prints? c. How many prints must be sold to earn pretax income of $7,500?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

My Art sells framed art prints for $100.
The unit variable cost per phone is $50
plus a selling commission of 10%. Fixed
manufacturing costs total $1,250 per
month, while fixed selling and
administrative costs total $2,500.
Required:
a. What is the contribution margin per
print?
b. What is the breakeven point in prints?
c. How many prints must be sold to earn
pretax income of $7,500?

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Step 1: Introducing Breakeven Point of Sales

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Step 2: Calculate the Contribution Margin Per Print

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Step 3: Calculate the Breakeven Point of Sales

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Step 4: Calculate the Target Prints Sold

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