Answer:
$32,000
Step-by-step explanation:
To determine the break-even point in units produced and in dollar sales for Under Armour selling tee shirts for $16 each with fixed and variable expenses, we can calculate as follows:
a. Break-even point in units produced:
To find the break-even point in units produced, we need to equate the total revenue to the total cost.
Total Cost = Fixed Expenses + (Variable Cost per unit * Number of units)
Total Revenue = Selling Price per unit * Number of units
Let x be the number of units produced and sold.
Given:
Fixed Expenses = $20,000
Variable Expenses per shirt = $6
Selling Price per shirt = $16
Total Cost = $20,000 + ($6 * x)
Total Revenue = $16 * x
At the break-even point, Total Cost = Total Revenue
$20,000 + ($6 * x) = $16 * x
$20,000 = $16x - $6x
$20,000 = $10x
x = $20,000 / $10
x = 2,000 units
Therefore, the break-even point in units produced is 2,000 units.
b. Break-even point in dollar sales:
To find the break-even point in dollar sales, we can use the break-even quantity (2,000 units) and the selling price per unit.
Break-even point in dollar sales = Break-even units * Selling Price per unit
Break-even point in dollar sales = 2,000 units * $16
Break-even point in dollar sales = $32,000
Therefore, the break-even point in dollar sales is $32,000.
