Answer
Breakeven Point (in units) = \$24,666.67 $\div$ \$15 ≈ 1,644.44
Work Step by Step
Total Fixed Costs = Rent + Employee Costs + Manager's Cost Total Fixed Costs = \$800 + (\$10/hour $\times$ 2 employees$ \times$ 160 hours) + (\$40,000 $\times$ 0.5) + (\$40,000 $\times$ 0.2 $\div$ 12)
Total Fixed Costs = \$800 + \$3,200 + \$20,000 + \$666.67 ≈ \$24,666.67
Contribution Margin per Unit = Selling Price - Variable Cost per Unit Contribution Margin per Unit = \$20 - \$5 = \$15
Breakeven Point (in units) = Total Fixed Costs \div Contribution Margin per Unit
