Julie makes and sells shirts for children and adults. She sells the shirts for $20 per unit. Material forthe shirts cost $6 each. She has fixed costs per month of $420 and estimates that she can makeand sell 80 shirts each month. How many shirts does Julie need to sell to break even?
Accepted Solution
A:
Answer:Julie need to sell at least 45 shirts to break even.Step-by-step explanation:The selling cost of each shirt = $ 20Cost of each shirt = $6The fixed cost per month = $420Number of shirts she can make = 80Hence, the cost of making 80 shirts = 80 x $6 = $480So, her total capital investment of the month = Cost of shirts made + Fixed cost = $420 + $480 = $900Now, let us assume she sell k number of shirts. ⇒ $20 x k = $900or, k = 900 / 20 = 45 or, k = 45Hence, Julie need to sell at least 45 shirts to break even.