Answer:
See below
Explanation:
Breakven even point is computed as
= Fixed costs / ( Sales price per unit - Variable costs per unit)
For basic lawn mower, Given that;
Fixed cost = $5,000,000
Sales price per unit = $150
Variable costs per unit = $50
BEP = $500,000 / ($150 - $50)
BEP = $500,000 / $100
BEP = 5,000 units
For Riding tractor, given that;
Fixed costs = $500,000
Sales price per unit = $1,500
Variable cost per unit = $500
BEP = $500,000 / ($1,500 - $500)
BEP = $500,000 / $1,000
BEP = 500 units
It therefore means that 5,000 units of basic Lawn mower must be sold to break even, while 500 units of riding tractor must be sold to break even.
