Kid’s corner sells lamp systems for $25. these systems use leds to create a light display across walls or ceilings. kid’s corner pays $13 for the systems. fixed costs incurred by the company are $18,000. a. what is the breakeven point in units? b. if kid’s corner wishes to earn $10,000 in operating income, how many systems will it have to sell?

a. Breakeven point: 1,500 units.

b. Kid´s Corner would have to sell 2,333.33 units to earn $10,000 in operative income.

Explanation:

a. breakeven point in units

breakeven point=

b. Operating income =  Total revenue - direct costs-indirect costs

$10,000=$25*X-$13*X- 18,000

Where X is the amount of units to sell

Isolating X from the equation, we have:

12X=28,000

X=28,000/12

X= 2,333.33

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