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natali 33 [55]
3 years ago
14

Gourmet Pets is interested in computing the break-even point for its new product Prime Cuts. The fixed costs of adding this prod

uct to the product line amounts to $20,000. Variable costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package. The break-even point would be:
Business
2 answers:
ELEN [110]3 years ago
7 0

Answer:

Break-even point=5,000 units

Explanation:

Giving the following information:

The fixed costs of adding this product to the product line amounts to $20,000. Variable costs to produce one package of Prime Cuts are $2. Prime Cuts will sell for $6 per package.

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

Break-even point= fixed costs/ contribution margin

Break-even point= 20,000/ (6 - 2)

Break-even point=5,000 units

Greeley [361]3 years ago
5 0

Answer:

The breakeven point is 5000 units

Explanation:

The breakeven point in units can be calculated by using the following formula:

Breakeven Sales In Dollars = Fixed Cost / Contribution per unit

The fixed cost here is $20,000 and the contribution per unit is $4 ($6-$2).

So by putting the values, we have:

Breakeven Sales In Dollars = $20,000 / $4 per unit = 5000 Units

So the sales required to breakeven at a contribution per unit of $4 is 5000 units.

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Answer:

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Explanation:

please find attached the table referred to in this question and a second table where marginal cost is included

A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply.

in a perfect competition, price = marginal cost = marginal revenue

Marginal cost = total cost 2 - total cost 1

e.g. marginal cost at 2 units of output = $7 - $2 = $5

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looking at the second attached table, there are two points where marginal cost is equal to $5. at output 1 and output 5.

at output one, Hank and Helen would be earning a loss because total cost is greater than total revenue. so they would not supply at this point.

at output five, Hank and Helen would earn a profit and thus would supply at 5 units of output.

Since all firms face and identical cost structure, the industry supply would be 100 x 5 = 500 pounds

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