Question

The Oliver Company plans to market a new product. Based on its market studies, Oliver estimates that it can sell up to 5,500 units in 2005. The selling price will be $5 per unit. Variable costs are estimated to be 50% of total revenue. Fixed costs are estimated to be $5,600 for 2005. How many units should the company sell to break even?

Answer 1

Answer:2240 units

Step-by-step explanation:

Given

Fixed cost=$ 5600

variable cost=50 % of total revenue

selling price=$ 5

Let x be the no of unit Produced

Revenue=5x

variable cost$=0.5 \times 5x=2.5x$

Total cost=5600+2.5x

For break even

Total cost= revenue

5600+2.5x=5x

2.5x=5600

$x=\frac{5600}{2.5}=2240 units$