Arthur crafts miniature chocolate dollhouses which he sells for $23 each. Arthur has calculated the breakeven level of revenues for his business at $1,460 of sales. The dollhouses have a variable cost of $8 to produce per unit.What are Arthur's fixed costs?

The break-even point is the level of production at which the costs of production equal the revenues for a product and calculated by using following formula:

Break-even point in units = Fixed costs/(Selling price per unit-Variable cost per unit)

Fixed costs = Break-even point in units x (Selling price per unit-Variable cost per unit)

In Arthur, Break-even point in units = $1,460/$23

Fixed costs = $1,460/$23 x ($23 - $8) = $952

nikitavidya0 nikitavidya0 · Answer 2 · 2022-03-18T09:36:36+01:00

The fixed cost for Arthur's crafts miniature chocolate dollhouses is $952.

What is the break-even point?

The break-even point is regarded as the level at which production costs tend to be equal to the revenues for the product.

What is the computation of the break-even point?

[tex]BE=\frac{FC}{SP-VC}[/tex]

Now, the fixed cost would be calculated as:

[tex]BE*(SP-VC)[/tex]

Therefore, the fixed cost would be:

[tex]\frac{1460}{23} * (23-8)\\=952[/tex]

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