Answer: Break even point is 80 computer to be reworked per day to cover all expenses and break even.
Step-by-step explanation:
Given: $250 per day equipment rental per day is the fixed cost of reworking computers.
$150 per day Rental for space to rework computers which is also a fixed cost.
$26 per computer reworking selling price as the service of reworking is sold per computer which is a variable cost.
$18 per computer for cost of material to rework the computer which is a variable cost.
$3 per computer is the cost of labour per reworked which is a variable cost.
NB
The identification between fixed and variable costs is like this. Fixed costs are those costs that do not vary or change due to the number of units sold or produced. Variable costs are those costs directly involved with the selling or producing of a product so they vary with the number of units sold or bought.
Break-even point = fixed costs/ (selling price per unit –variable costs per unit)
This is the formula we will use to calculate the Break-even point which is the number of computers the company needs to rework to cover the costs they have and earn $0 profit.
Substitute the above mentioned values:
Break-even point = ($150 per day+ $250 per day)/ ($26 per unit – ($18 per unit+$3 per unit))
Break-even point = $400 per day/ $5
Break-even point = 80 units per day
The company must rework 80 computers to cover all expenses in the business per day.
