Asked by Natalee Hines on Jul 12, 2024
Verified
A product is currently made in a process-focused shop, where fixed costs are $14,000 per year and variable cost is $80 per unit. The firm sells the product for $150 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 400 units per year?
Break-Even Point
The point at which total costs and total revenue are equal, resulting in no net loss or gain.
Variable Cost
Expenses in a business operation that fluctuate with the level of output, such as materials and labor costs.
- Master the understanding of breakeven analysis and its role in business decision processes.
- Determine and realize the influence of constant and fluctuating costs on earnings.
Verified Answer
AP
Alexandre PapadopulosJul 19, 2024
Final Answer :
BEP = 200 units; TR = $60,000, TC = $46,000, therefore Profit = $14,000.
Learning Objectives
- Master the understanding of breakeven analysis and its role in business decision processes.
- Determine and realize the influence of constant and fluctuating costs on earnings.