Answered

Connect with knowledgeable experts and enthusiasts on IDNLearn.com. Discover reliable and timely information on any topic from our network of knowledgeable professionals.

You own a small manufacturing business that produces widgets. You have spent $400,000 acquiring the fixed assets you need to produce widgets. Each widget costs you $3 to make and they sell for $25 each, so your variable cost is 12% of the overall revenue. At your current level of operating leverage, how many widgets must you sell to break even

Sagot :

Anthougoidn

At the current level of operating leverage, the small manufacturing business needs to sell 18,182 units of widgets to break even.

What is the break-even point?

The break-even point is the level of production and sales required so that the entity does not incur any losses or earn any profits.

At the break-even point, the total costs (fixed and variable) equal the sales revenue.

Data and Calculations:

Fixed assets = $400,000

Production cost of each widget = $3

Selling price per unit = $25

Variable cost per unit = $3 ($25 x 12%)

Contribution margin per unit = $22 ($25 - $3)

Break-even point in units = Fixed Costs/Contribution margin per unit

= 18,182 units ($400,000/$22)

Thus, at the current level of operating leverage, the small manufacturing business needs to sell 18,182 units of widgets to break even.

Learn more about break-even analysis at https://brainly.com/question/21137380

#SPJ1

We value your participation in this forum. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. IDNLearn.com has the solutions to your questions. Thanks for stopping by, and see you next time for more reliable information.