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Square Fez is a distributor of brass picture frames. For 2012, Square plans to purchase frames for P30 each and sell them for P45 each. Square's fixed costs for 2012 are expected to be P240,000. Square's only other costs will be variable costs of P60 per shipment for preparing the invoice and delivery documents, organizing the delivery, and following up for collecting accounts receivable. The P60 cost will be incurred each time Square ships an order of picture frames, regardless of the number of frames in the order.
Question 1: Suppose Square anticipates making 500 shipments in 2012, how many picture frames must Square sell to breakeven in 2012?
Option 1: 20,000
Option 2: (5,333)
Option 3: 18,000
Option 4: 16,000
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