Question

Explain step by step
If the cost of manufacturing mobile phones is $10,000 for the factorytime plus $80 per phone and that each phone sells for $100, how many phones must be manufactured for the mobile phone manufacturer to break even (when costs equals revenue)?

Answer 1

Answer:

Step-by-step explanation:

A. What is the contribution margin per phone?

Selling Price - $100.00

Variable Cost = CAD$50 + 10%($100)

Total Variable Cost = $50+10

Total Variable Cost = $60.00

Contribution Margin = Selling price - Variable Cost

= $100-60

= $40

B. What is the break even point ?

BEP = TFC /Unit Contribution

= 2500+1250 /40

= 94 ( Rounded off to nearest whole #)

C. How much phone must be sold for us to meet a target $7500?

Sales ( Unit) = TNI+TFC/Contribution Margin

= $3750+$7500/40

= $11250/40

= 281 phones