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?© BrainMass Inc. brainmass.com October 10, 2019, 7:46 am ad1c9bdddf
The average variable cost = unit variable cost + commission = 50 + 100*10% = 60
Then, contribution margin = ...
The solution shows how to compute the average variable cost, the fixed cost, the contribution margin, and the break even unit.