Concept explainers
A furniture manufacturer specializes in wood tables. The tables sell for $100 per unit and incur $40 per unit in variable costs. The company has $6,000 in fixed costs per month. Expected sales are 200 tables per month.
The company begins manufacturing wood chairs to match the tables. Chairs sell for $50 each and have variable costs of $30. The new production process increases fixed costs to $7,000 per month. The expected sales mix is one table for every four chairs. Calculate the breakeven point in units for each product.
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