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A company charges $12 for a particular item that it costs the company $4 per unit to produce with a daily overhead of $3000. How many items must the company produce each day in order to break even?

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pedrocarratore

Answer:

375

Explanation:

In order to break even, the total contribution margin from the items sold each day must at least equal the daily overhead.

The contribution margin per item is:

[tex]CM = \$12-\$4 = \$8[/tex]

Therefore, the number of items 'x' needed to break even is:

[tex]\$8*x=\$3,000\\x=375\ items[/tex]

The company must produce 375 items each day in order to break even.

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