Question

Bikes'R'Us manufactures bikes, which sell for $250. It costs the $180 per bike, plus a startup fee of $3,500. After how many bikes sold will the manufacturer break even?

Answer 1

Answer:

The bikes sold at break even by the manufacturer is 50 units

Explanation:

We know that break even point is given by  the following formula,

$\frac{\text { Fixed costs }}{\text { (Price per unit - Variable costs) }}$

We are given startup fee = $3500 which is the fixed cost,

the bikes sell for $250 which is the price per unit and

cost per bike is equal to $180

So substituting these values in the formula we get

= $\frac{3500}{(250-180)}$

= $\frac{3500}{(70)}$  = 50

= 50 units which is the number of bikes sold at break even by the manufacturer.