Jim and Mary are preparing to open a business. However, they need to determine its potential...
Jim and Mary are preparing to open a business. However, they need to determine its potential profitability by performing a break-even analysis. They have estimated that the annual fixed cost will be 25,000. The variable cost for each unit produced is $1.50 and the selling price will be $3.00. If Jim and Mary are able to sell 16,000 units, what would be their contribution to profit
$0.00
$12.00
$120.00
$1200.00
Homework Answers
The correct option is $0.00
Profit = Volume (Selling price - Variable cost) - fixed cost
= 16000 * (3 - 1.5) - 25000 = - 1000
Therr is a loss of $1000
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