Wally's Interior Design sells curtains

Finance Oct 30, 2020

Wally's Interior Design sells curtains. The selling price of a set of curtains is $1,132 and the variable (flexible) costs per set of curtains is $447. The Total Fixed Cost for the store are $86,812

What is the breakeven point? (round to whole units, no decimals)

Expert Solution

Computation of Break-even Point:

Break-even Point = Fixed Cost / Contribution Margin per set of curtains

Here,

Contribution Margin per set of curtains = Selling Price per Set of Curtains - Variable Cost per Set of Curtains

= $1,132 - $447

Contribution Margin per set of curtains = $685 per set of curtains

Break-even Point = $86,812/$685 = 126.73 or 127 units

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