Answer:
12,500 units
Step-by-step explanation:
Given:
Selling cost of the pump = $10
Variable cost of producing each unit = 60% of selling cost
or
Variable cost of producing each unit = 0.60 × $10 = $6
Monthly fixed cost = $50,000
Now,
The profit per unit = Selling cost - Variable cost
or
The profit per unit = $10 - $6 = $4
Therefore,
The breakeven point =
or
the breakeven point =
or
the breakeven point = 12,500 units
The exponential graph is shown below.
The initial value when the time is zero is 70000. An initial value is normally shown as the point where the graph crosses the y-axis.
If the initial value was to be 50000, the curve would have crossed the y-axis at 50000
The correct answer is the first statement