You are selling a new line of T-shirts on the boardwalk. The selling price will be $25 per shirt. The labor cost is $5 per shirt. Additionally, the cost of materials will be $10 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually, and the sales and marketing expenses are $20,000 a year. What is the break-even in units and BEP in dollars? Formulac
You are selling a new line of T-shirts on the boardwalk. The selling price will be $25 per shirt. The labor cost is $5 per shirt. Additionally, the cost of materials will be $10 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually, and the sales and marketing expenses are $20,000 a year. What is the break-even in units and BEP in dollars? Formulac
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:You are selling a new line of T-shirts on the boardwalk. The selling price will be $25 per shirt The labor cost is $5 per shirt. Additionally, the cost of materials will be $10
per shirt. The administrative costs of operating the company are estimated to be $60,000 annually, and the sales and marketing expenses are $20,000 a year.
What is the break-even in units and BEP in dollars?
Formulas:
Contribution Margin = Unit Selling Price-Unit Variable Cost
Profit - Total Revenue - Total Cost
or
Profit - Quantity Sold (Selling Price per unit - Variable Cost per unit) - Fixed Cost
Fixed Cost
Break-even (quantity) =
Unit Selling Price - Unit Variable Cost
Break-even ($) = Break-even (quantity). X Quantity Sold
Fixed Cost + Profit Desired
Unit Selling Price - Unit Variable Cost
Target Quantity for certain profit =
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