Question

A sportswear manufacturer is introducing a new line of sneakers. To introduce the new line, the company must pay out a fixed cost of $1.5 million for advertising and equipment, plus there is a cost of 40 cents per pair of sneakers manufactured. It plans to sell the sneakers for $75 per pair. Let x be the number of pairs of sneakers manufactured. What is the total revenue at breakeven? Give your answer to the nearest thousand.

Answer 1

Answer:

Total revenue at breakeven is $1,508,042

Explanation:

Breakeven point in units  = Fixed cost / Selling price -Variable cost per unit

Breakeven point in sales revenue  = Fixed cost / (Selling price* x)- (Variable cost per unit * x)

In this case,  

Fixed cost= $1.5 million

Selling price =$75

Variable cost per unit =40 cents

Breakeven point in units  = 1,500,000 million/ 75 -0.4

Breakeven point in units  = 20,107

Breakeven point in units sales = 20,107 * 75

Breakeven point in units sales = $1,508,042