Respuesta :
According to the given information, 800 shoes must be manufactured for meeting break even point for a month.
Given:
Shoe price = $100
Variable cost for one shoe = $50
Total fixed cost for one month = $40,000
[At break even point cost = Price and that point never get profit]
Therefore, Allocatable fixed cost to each shoe = 40000/50 = 800
800 shoes must be manufactured for meeting break even point for a month.
- By comparing the market price of an asset to its initial cost, the break-even point (break-even price) for a trade or investment can be identified. The break-even point is reached when the two prices are equal.
- In corporate accounting, the break-even point is calculated by dividing the total fixed production costs by the revenue per unit less the variable production costs per unit. Fixed costs in this context refer to expenses that are constant regardless of the quantity of units sold. The production level at which total sales for a product equal total expenses is known as the break-even point.
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