Suppose You Are the Owner of a Picture Frame Store

Multiple Choice

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting) . What is the quantity of picture frames you will need to sell to break even?

A) 200 picture frames
B) 400 picture frames
C) 800 picture frames
D) 1,600 picture frames
E) 2,000 picture frames