Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each are shown: Salvador Manufacturing data Product Selling price per unit Variable cost per unit Snowboards $301 $175 Skis 455 204 Poles 79 44 Their sales mix is reflected in the ratio 8:2:8. If annual fixed costs shared by the three products are $136,431, how many composite units will need to be sold in order for Salvador to break even?
Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each are shown:
Salvador Manufacturing data
| Product | Selling price per unit | Variable cost per unit |
|---|---|---|
| Snowboards | $301 | $175 |
| Skis | 455 | 204 |
| Poles | 79 | 44 |
Their sales mix is reflected in the ratio 8:2:8. If annual fixed costs shared by the three products are $136,431, how many composite units will need to be sold in order for Salvador to break even?
Introduction:
The break-even point is the point during which total cost and total revenue are equal, implying that one small business is neither losing nor making money. In other words, you've reached the point where a product's production costs equal its revenue. Total sales equal total expenses when your company reaches a break-even point. This means you're earning exactly what you need to cover your expenses as well as run your business. Your company does not benefit when it reaches break-even. It does not, however, have a loss.
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