Marley Enterprises re-grips golf clubs for manufacturers of golf equipment. The

Question

Marley Enterprises re-grips golf clubs for manufacturers of golf equipment. The relevent financial data is as follows:            Each grip sells for $3.00 each.

            Employees salaries                                          $2,000 per month

            Rent                                                                1,000 per month

            Utilities                                                                500 per month plus $.50 per grip

            Grips   - Direct materials $1.25 per grip                               

Compute the breakeven in units and dollars (Round to nearest whole number).

Explanation / Answer

let company sells x units

for break even revenue is equal to costs

3 * x = 2000 +1000 + 500 + 0.5 * x + 1.25 * x

x = 2800 units

the break even units = 2800 grips

break even in dollars = 2800 * 3 = 8400

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