The Stove Shop manufactures gas fireplace surrounds and is evaluating a new model that will incorporate stainless steel material to provide a sleek and modern look to the typical gas-log fireplace. The Stove Shop sells their fireplaces to retail outlets that specialize in custom or semi-custom installation to the residential market. The Stove Shop believes the new product will be successful but wants to identify the break-even point in order to establish minimum goals for the first quarter of production. The Stove Shop estimates that its fixed costs to produce the new model will be $140,000. They believe a wholesale price of $249 will enable retail outlets to offer the product for sale at $525 to its residential customers. Variable costs are estimated to be $110. How many units will The Stove Shop need to sell in order to reach the break-even point?

The Stove Shop manufactures gas fireplace surrounds and is evaluating a new model that will incorporate stainless steel material to provide a sleek and modern look to the typical gas-log fireplace. The Stove Shop sells their fireplaces to retail outlets that specialize in custom or semi-custom installation to the residential market. The Stove Shop believes the new product will be successful but wants to identify the break-even point in order to establish minimum goals for the first quarter of production. The Stove Shop estimates that its fixed costs to produce the new model will be $140,000. They believe a wholesale price of $249 will enable retail outlets to offer the product for sale at $525 to its residential customers. Variable costs are estimated to be $110. How many units will The Stove Shop need to sell in order to reach the break-even point?

The Stove Shop manufactures gas fireplace surrounds and is evaluating a new model that will incorporate stainless steel material to provide a sleek and modern look to the typical gas-log fireplace. The Stove Shop sells their fireplaces to retail outlets that specialize in custom or semi-custom installation to the residential market. The Stove Shop believes the new product will be successful but wants to identify the break-even point in order to establish minimum goals for the first quarter of production. The Stove Shop estimates that its fixed costs to produce the new model will be $140,000. They believe a wholesale price of $249 will enable retail outlets to offer the product for sale at $525 to its residential customers. Variable costs are estimated to be $110. How many units will The Stove Shop need to sell in order to reach the break-even point?


390 units

337 units

507 units

1,007 units



Answer: 1007 units


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