Portia Company is a retailer of hammers Portia pays 475 for

Portia Company is a retailer of hammers Portia pays $4.75 for each hammer and sells them for $8.00. Monthiy fixed costs are $26,000. The hammer cost is the only variable cost a. What is the contribution margin per unit? (Round your answer to 2 decimal places.) per Unit b. What is the break-even point in units? (Do not round intermediate calculations.) Units c. How many units will Portia need to sell to earn target profit of $13,000? (Do not round intermediate calculations.)

Solution

a. Contribution margin = $8.00 - $4.75 = $3.25 per unit

b. Break-even point = $26,000 / ($8.00 - $4.75) = 8,000 units

c. Total number of units = ($26,000 + $13,000) / ($8.00 - $4.75) = 12,000 units