Problem:
The average selling price of shoes is $95 per pair. The variable cost is $55. The company incurs fixed cost is $160,00 per year.
Required:
- What is the break even point in pairs of shoes?
- What is the dollar sales volume to reach the break even point?
- What would be the profit or loss before EBIT at 4000, 11,000,16000 pairs of shoes?
Note: Please show how you came up with the solution.