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Ocean City Kite Company manufactures & sells kites for $5.00 each. The variable cost per kite...

Ocean City Kite Company manufactures & sells kites for $5.00 each. The variable cost per kite is $2.00 with the current annual sales volume of 70,000 kites. This volume is currently Ocean City Kite's breaking even point. Use this information to determine the dollar amount of Ocean City Kite Company's fixed costs. (Round dollar value to the nearest whole dollar & enter as whole dollars only.)

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Answer #1

Please find below the fixed costs of Ocean City Kite Company

At Break-Even Point the profit / Earnings before Interest and Tax is "Zero" (i.e. no profit no loss situation) under the given condition the sales volume of 70000 is the break-even point.

Below is the calculation for fixed costs

Current Sales Volume 70000
Sales @ $5 $        350,000
Variable Cost @ $2 $        140,000
Contribution $        210,000
Fixed Cost $        210,000
EBIT $                   -  

The fixed costs is back calculated after considering the profit / EBIT as "0".

Let me know if you have any questions.

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