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Ocean City Kite Company manufactures & sells kites for $8.50 each. The variable cost per kite...

Ocean City Kite Company manufactures & sells kites for $8.50 each. The variable cost per kite is $3.00 with the current annual sales volume of 70,000 kites. This volume is currently Ocean City Kite's breaking even point. Use this information to determine the dollar amount of Ocean City Kite Company's fixed costs. (Round dollar value to the nearest whole dollar & enter as whole dollars only.)

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Answer #1

Selling Price per Kite = $ 8.50

Variable Costs per Kite = $ 3

Contribution Margin per Kite = Selling Price per Kite - Variable Costs per Kite

Contribution Margin per Kite = 8.50 - 3.00

Contribution Margin per Kite = $ 5.50 per Kite

Break Even Point in Units / Kites = Fixed Costs / Contribution Margin per Kite

Contribution Margin per Kite = $ 5.50

Fixed Costs = ?

Break Even Point in Kites = 70,000 Kites

Fixed Costs = Break Even Point in Kites * Contribution Margin per Kite

Fixed Costs = 70,000 * 5.50

Fixed Costs = $ 385,000

Fixed Costs in Dollars = $ 385,000

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