Answer to Question #102437 in Economics for Rimie♥️

Question

1. Julie makes and sells yoga mat. She sells the mat for $50 per unit. Material for the mat cost $15 each. She has fixed costs per month of $6,500 and estimates that she can make and sell 180 mats each month. How many mat does Julie need to sell to break even?

Answer 1

Selling price per unit =$50

Variable cost per unit is =$15

Contribution margin per unit is selling price per unit less variable price per unit.

Contribution margin per unit is $50-$15=$35

Break even in units =fixed cost /contribution margin per unit.

6500/35

= 186 units

Julie needs to sell 186 mat in order to break even.