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21 October, 19:58

Mason Company manufactures and sells shoelaces for $3.90 per pair. Its variable cost per unit is $3.50. Mason's total fixed costs are $12,400. How many pairs must Mason sell to break even?

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  1. 21 October, 20:55
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    31,000

    Explanation:

    Given that,

    Selling price = $3.90 per pair of shoes

    Variable cost = $3.50 per unit

    Total fixed cost = $12,400

    Contribution margin per unit:

    = Selling price - Variable cost

    = $3.90 - $3.50

    = $0.40

    Pairs must Mason sell to break even:

    = Fixed cost : Contribution margin per unit

    = $12,400 : $0.40

    = 31,000
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