Question

Xavi sells seashore paintings. His annual Fixed Costs are $600 and the Variable Costs are $5...

Xavi sells seashore paintings. His annual Fixed Costs are $600 and the Variable Costs are $5 per painting.

If Xavi sells his paintings for $15, and sells 50 paintings per year more than his breakeven volume, what is his average cost per painting?

bevol = 60
marpct = 0.67 (67%)
contrib = $10.00

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Answer #1
Break even volume of paintings 60
Additional paintings sold 50
Total volume of paintings 110
Variable cost per painting $                     5
Total variable cost = Volume * variable cost per painting = 110*5 = $                550
Fixed cost $                600
Total cost = Variable cost + Fixed cost = $             1,150
Average cost per painting = Total cost/Total volume of paintings = 1150/110 $             10.45
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