A pottery maker is considering adding a new plant for additional capacity

Accounting Sep 18, 2020

A pottery maker is considering adding a new plant for additional capacity. The proposed facility will have fixed costs of $9500 per month and variable costs of $0.62 per unit produced. Each piece of pottery is sold to retailers at a price that averages $1.11.

What monthly volume is needed to break even?

Expert Solution

Given,

Per month fixed cost (FC) = $9500

Per unit variable cost(VC) = $0.62

Per unit revenue (R) = $1.11

Volume needed to break even = FC / (R - VC)

= 9500 / (1.11 - 0.62)

= 9500 / 0.49

= 19387.76 units

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote