50 lb bags @ $12.50/bag
Fixed Costs: $68,000
Variable Costs $.15/lb
Annual Interest Expected $7500
A. What is the break-even point in bags?
B.
C.
To calculate the break-even point in bags, you need to determine the total cost per bag and divide the fixed costs by the contribution margin per bag. Here's how to calculate it:
A. Break-even point in bags:
1. Calculate the variable cost per bag: $12.50 (price per bag) + ($0.15 (variable cost per pound) x 50 lbs) = $12.50 + $7.50 = $20.00
2. Calculate the contribution margin per bag: Price per bag - Variable cost per bag = $12.50 - $7.50 = $5.00
3. Calculate the break-even point in bags: Fixed costs ÷ Contribution margin per bag = $68,000 ÷ $5.00 = 13,600 bags
Therefore, the break-even point in bags is 13,600 bags.
B. (No specific question provided)
C. (No specific question provided)