Mason must sell 25,500 pairs to break even.
Break-even analysis is a tool used by businesses to determine the point at which they will neither make a profit nor incur a loss. The break-even point is calculated by dividing the total fixed costs of a business by the selling price per unit of product. Businesses use break-even analysis to determine the number of units of product that must be sold in order to cover all of their costs. This information is then used to make decisions about pricing, production levels, and other factors that affect a business's bottom line.
Given that,
Shoelaces sold for (S) $2.80/pair
Variable costs per unit (V) = $2.40
Total fixed costs (F)= $10,200
According to the formula,
Break even point = F/ (S-V) = 10,200 /(2.80 - 2.40) = 10,200/ 0.4 = 25,500 units
It can be concluded that Mason must sell 25,500 pairs to break even.
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