The company needs to sell 50 phones a week to break even.
The formula for finding the breakeven point is:
= Fixed costs / Contribution margin
The Contribution margin is found by deducting the variable costs from the selling price.
Variable cost = $350 per phone
Fixed cost = $25,000 incurred per week
Contribution margin :
= Selling price - variable cost
= 850 - 350
= $500
Breakeven point:
= 25,000 / 500
= 50 phones
50 phones need to be sold weekly for the company to break even.
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