Question

A company makes travel umbrellas. Its fixed costs are $1000 a week and its variable costs for one batch of umbrellas are $500 for every 2000 units. The company ships 10,000 units a week. What is the break-even price for a week's worth of umbrellas?

Answer 1

Answer:

the break even price is $0.35

Explanation:

The computation of the break even price is shown below"

= (Variable cost + fixed cost) ÷ (Number of units sold)

= ($500 ÷ 2,000 ×10,000 + $1,000) ÷ (10,000 units)

= ($2,500 + $1,000) ÷ (10,000 units)

= $0.35

hence, the break even price is $0.35

We simply applied the above formula so that the correct value could come

And, the same is to be considered