Question

The fixed cost of a production system is $20,000, and the variable cost per unit product is $17. The product has a revenue of $28 per unit. Calculate the breakeven quantity and determine the profit or loss amount when 1,500 units are produced. g

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Fixed costs= $20,000

Unitary variable cost= $17

Selling price= $28 per unit.

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 20,000 / (28 - 17)

Break-even point in units= 1,818 units

Now, the profit for 1,500 units:

Loss= 1,500*11 - 20,000= -$3,500