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    Manufacturing Costs and the Breaking Even

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    U.S. Telephone Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10% (based on the unit sales price per phone). Fixed manufacturing costs total $1,300 per month, while fixed selling and administrative costs total $2,320. How many phones must be sold to achieve the break even point?

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    Solution Preview

    The average variable cost = unit variable cost + commission = 50 + 100*10% = 60

    Then, contribution margin = ...

    Solution Summary

    The solution shows how to compute the average variable cost, the fixed cost, the contribution margin, and the break even unit.