Question
Your company produces face masks. The unit selling price is $5. The company's costs for 2020, when it produced and sold 1,000 masks, were as
Your company produces face masks. The unit selling price is $5. The company's costs for 2020, when it produced and sold 1,000 masks, were as follows:
Production costs: Variable labor and materials - $2 per unit. Fixed factory overhead - $5 per unit
Selling and administrative expenses: Variable selling and admin - $1 per unit. Fixed selling and adm exp - $5 per unit.
Assuming that unit selling price, unit variable costs, and total fixed costs remain the same in 2021, how many masks must the company sell to break even? Explain your calculations.
A. 5,000
B. 3,000
C. 10,000
D. 20,000
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