Problems (Show all work) 1. (2 points) Akizuki Fall Moon Winery Produces Wine in

Question

Problems (Show all work) 1. (2 points) Akizuki Fall Moon Winery Produces Wine in the Willamette Valley. They charge $4.00 per bottle. --Variable costs per bottle include $0.40 for acids, enzymes and additives, $0.10 for the water, $0.40 for the grape concentrate, $0.05 for each bottle, and $0.35 for variable selling costs --Monthly fixed costs are $3,100 to rent equipment and building, $4,000 for salaries, and $400 for other fixed costs. a. How many bottles must be sold in a month to break-even? b. What is the break-even sales revenue?

Explanation / Answer

a. Bottle to be sold for Break even

Break-Even Point in Units = Fixed Costs / (Sales Price Per Unit - Variable Costs Per Unit)

=[3100+4000+400]/[4-.4-.1-.4-.05-.35]

=7500/2.7

=2778 Bottles

b. Break even sale revenue =2778*4=$11,112

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