Principal Printing Produces Custom Labels and Stationary for Companies

Essay

Principal Printing produces custom labels and stationary for companies. In conducting CVP analysis of its Personalized Package, management decided to determine how many of the packages would need to be sold in order to justify continuing the product line. Management determined that fixed costs direct related to this particular product amounted to $54,000 annually. Principal reported $240,000 of gross sales related to this product and variable product costs of $180,000.
Assuming that each Personalized Package sells for $12 per unit, what is the minimum number of Personalized Packages that Principal needs to sell to break even and therefore justify the product line?