A T-shirt shop produces 5,000 custom printed T-shirts per month

Answer) Following information is given

• Total tshirts produced per month=5000
• Fixed cost per month=P15,000
• Marginal cost per tshirt(Constant)=P4
• Total cost=Fixed cost+variable cost(total tshirts*marginal cost per tshirt)=P15,000+5000*P4=P35,000
• Breakeven will take place when total selling price of these tshirts will equal total cost that is P35,000,so for total selling price of 5000 tshirts to be equal to P35,000,per unit price of each tshirt should be equal to total selling price/total number of tshirts sold=P35,000/5000=P7
• So,break-even price is P7
• if the shop were to sell 50% more units,it would be 2500 extra tshirts,variable cost of these 2500 tshirts would be 2500*P4=P10,000,so total cost will become P35,000+P10,000=P45,000
• Breakeven will take place when total selling price of these tshirts will equal total cost that is P45,000,so for total selling price of 7500 tshirts to be equal to P45,000,per unit price of each tshirt should be equal to total selling price/total number of tshirts sold=P45,000/7500=P6
• So,break-even price in this case would be P6