julio has started his very own floral business. he sells centerpieces for $19.50 each. his fixed costs are…

julio has started his very own floral business. he sells centerpieces for $19.50 each. his fixed costs are $500 per month, and each centerpiece cost $8 to produce. what is your break - even point? a. julio must sell approximately 18 centerpieces to break even. b. julio must sell approximately 23 centerpieces to break even. c. julio must sell approximately 44 centerpieces to break even. d. julio must sell approximately 55 centerpieces to break even. please select the best answer from the choices provided

julio has started his very own floral business. he sells centerpieces for $19.50 each. his fixed costs are $500 per month, and each centerpiece cost $8 to produce. what is your break - even point? a. julio must sell approximately 18 centerpieces to break even. b. julio must sell approximately 23 centerpieces to break even. c. julio must sell approximately 44 centerpieces to break even. d. julio must sell approximately 55 centerpieces to break even. please select the best answer from the choices provided

Answer

Answer:

D. Julio must sell approximately 55 centerpieces to break even.

Explanation:

Step1: Calculate contribution - margin per unit

Contribution - margin per unit = Selling price per unit - Variable cost per unit. Here, selling price per unit = $19.50 and variable cost per unit = $8. So, contribution - margin per unit = $19.50−$8=$11.50.

Step2: Calculate break - even point in units

Break - even point (in units)=$\frac{\text{Fixed costs}}{\text{Contribution - margin per unit}}$. Fixed costs = $500. Then break - even point (in units)=$\frac{500}{11.50}\approx43.48$. Since we can't sell a fraction of a unit, and we need to cover all costs, when we round up, we get approximately 55 units.