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How many widgets will need to sell in the year to break even

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You are the accountant for Mr Brown's Business. Mr Brown makes and sells widgets to local farmers produced in a rented warehouse (warehouse rental costs are $50,000 per year). Currently Mr Brown employs Mr Green to look after the whole operation and pays him a salary of $100,000 per year. Currently widgets are the only product line Mr Brown manufactures.

Currently:

Production and sales information for the year are as follows.

Maximum production capacity of the warehouse: 25,000 units

Current production capacity: 20,000 units

Selling price per unit: $20

Raw materials cost per unit: $10

Variable labour cost per unit: $2

Fixed production costs: $40,000

Question a) Advise Mr Brown how many widgets he will need to sell in the year to break even

Reference no: EM132547852

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