you are considering opening a new business to sell dartboards. you estimate that your manufacturing…

you are considering opening a new business to sell dartboards. you estimate that your manufacturing equipment will cost $100,000, facility updates will cost $250,000, and on average it will cost you $80 (in labor and material) to produce a board. if you can sell dartboards for $100 each, what is your break - even quantity?\n a. 1,000\n b. 3,500\n c. 4,375\n d. 17,500

you are considering opening a new business to sell dartboards. you estimate that your manufacturing equipment will cost $100,000, facility updates will cost $250,000, and on average it will cost you $80 (in labor and material) to produce a board. if you can sell dartboards for $100 each, what is your break - even quantity?\n a. 1,000\n b. 3,500\n c. 4,375\n d. 17,500

Answer

Answer:

b. 3,500

Explanation:

Step1: Calculate total fixed costs

Fixed costs = $100000 + $250000 = $350000

Step2: Calculate contribution margin per unit

Contribution margin per unit = Selling price per unit - Variable cost per unit = $100 - $80 = $20

Step3: Calculate break - even quantity

Break - even quantity = $\frac{\text{Total fixed costs}}{\text{Contribution margin per unit}}=\frac{350000}{20}= 3500$