Question

Comfort Bach Inc.

Comfort Bach Inc. produces office chairs for the US markets. The price of the chair is $109.75 and the variable cost per chair is $49.75. The following fixed costs are incurred:

Depreciation of plant and equipment per year $20,000

Property taxes per year $22,000

Manager's salary and fringe benefits per month are $4,200

What is the full year sales volume needed to break-even - i.e., sales volume that covers all fixed costs (ROUND UP ANSWER)?

A 620

B 1,707

C 1,540

D None of the above

Answer 1

breakeven sales = (depreciation+property taxe+yearly salary)

=(20000+22000+4200*12)/(109.75-49.75)=1540