Question

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $50,000, and its variable cost is $15 per unit. The revenue is $25 per unit. What is the break-even point for machine A

Answer 1

The break-even point for Machine A given the fixed costs and variable costs is  5000.

What is the  break-even point?

The break-even point is the point at which the number of units produced and sold at which net income is zero. It is the ratio of fixed cost to the contribution margin.

Breakeven quantity = fixed cost / price – variable cost per unit

$50,000 / ($25 - $15)

$50,000 / $10 = 5000

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