Dream Threads Company sells hand-sewn shirts for $40 per shirt. It incurs monthly fixed costs of $7000. The contribution margin ratio is calculated to be 50%. What is the breakeven point in units? (Round your answer up to the nearest whole unit.)
A) 175 units
B) 3500 units
C) 80 units
D) 350 units
D) 350 units
Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Required sales in dollars = ($7000 + 0) / 50% = $14,000.00
Number of units to be sold to break even = $14,000.00 / $40 = 350 units
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