Asked by Yadelis Carmona gonzalez on Jun 24, 2024
Verified
A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable cost is $50 per unit. The firm sells the product for $200 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 200 units per year?
Break-Even Point
The point at which total costs and total revenue are equal, meaning no net loss or gain is incurred; a critical measure of financial viability for a product or business.
Variable Cost
Costs that change in proportion to the level of production or sales volume, such as raw materials and direct labor.
- Absorb the essence of breakeven analysis and its applications in strategic business determinations.
- Quantify and recognize the significance of fixed versus variable expenses on profit outcomes.
Verified Answer
DM
Daivik MishraJun 28, 2024
Final Answer :
BEP = 60 units; TR = $40,000, TC = $19,000, therefore Profit = $21,000.
Learning Objectives
- Absorb the essence of breakeven analysis and its applications in strategic business determinations.
- Quantify and recognize the significance of fixed versus variable expenses on profit outcomes.
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