Answer:
(a) In case Gina sells 20 shirts:
Total revenue: $300;
Total variable cost: $160.
(b)
Break-even point in terms of units sold: 50 shirts;
Total revenue at break-even point: $750.
Explanation:
(a) In case Gina sells 20 shirts:
Total revenue : Price per one unit sold * Number of units sold = 15 * 20 = $300;
Total variable cost: Variable cost per one unit * Number of units sold = 8 * 20 = $160.
(b)
The contribution margin in term of monetary unit one unit sold delivers is: Selling price - Variable cost = $15 - $8 = $7;
Break-even point in terms of units sold: Fixed cost/ Contribution margin per one unit sold = 350/7 = 50 shirts;
Total revenue at break-even point: Break-even point in terms of units sold * Selling price per one unit = 50 * 15 = $750.
Answer:
Total revenue :$300
Variable Cost : $160
Break Even : 50 units.
Explanation:
Key terms : Fixed cost is the fixed cost that does not vary with the volume of production.
Variable cost : is the cost that varies with the volume of production.
Contribution is the contribution that a sales made towards a production process. it is the source of fund for other types of cost
The revenue is calculated by multiplying total sales by the unit selling price while the total variable cost is obtained by multiplying the unit variable price by the number of unit sold.
The break even sales point is derived by dividing the total fixed cost by the unit sales contribution
