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QUESTION:
Question content area top
Part 1
Katie
K
a
t
i
e
Rhode
R
h
o
d
e
sells homemade knit scarves for
$ 16
$
1
6
each at local craft shows. Her contribution margin ratio is
62.5
6
2
.
5
%.
Currently,
the craft show entrance fees cost
Katie
K
a
t
i
e
$ 1 comma 000
$
1
,
0
0
0
per year. The craft shows are raising their entrance fees by
15
1
5
%
next year. How many
extra
scarves will
Katie
K
a
t
i
e
have to sell next year just to pay for rising entrance fee
costs?
Question content area bottom
Part 1
Begin by identifying the general formula to compute the breakeven sales in units.
(
+
) ÷
=
Breakeven sales in units
Part 2
Katie will have to sell
extra scarves next year just to pay for rising entrance fee costs.
ANSWER:
Begin by identifying the general formula to compute the breakeven sales in units.
(
Fixed expenses
+
Operating income
) ÷
Contribution margin per unit
=
Breakeven sales in units
15
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