Question

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). What is the quantity of picture frames you will need to sell to break even

Answer 1

Based on the selling price of the picture frames and the unit variable costs, the break-even point is 400 picture frames.

What is the breakeven point?

This can be found by the formula:

= Fixed costs / (Selling price - Variable costs)

Solving gives:

= 32,000 / (120 - 40)

= 32,000 / 80

= 400 picture frames

Find out more on breakeven point at https://brainly.com/question/21137380.

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