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nexus9112 [7]
3 years ago
6

A manufacturer sells a product for $10 per unit. The manufacturer's variable costs are $5 per unit and the fixed cost is $1000.

How many units must the manufacturer produce each month to break even?
Max 2A + 3B s.t. 1A + 2B S 6 5A + 3B
Mathematics
2 answers:
mixas84 [53]3 years ago
7 0

Answer:

200 units

Step-by-step explanation:

The total income must be at least equal to the costs, and that is:

10*U = 5*U + 1000   Solving for U, which is the amount of units sold per month:

U = 1000/5 = 200 units.

natka813 [3]3 years ago
3 0

Answer:

To break even, the manufacturer must produce 200 units each month

Step-by-step explanation:

To break even, the amount of total cost must be the same as the amount of revenues.  

Total Cost is Fixed cost plus unitary variable cost multiplied by the produce quantity.  

<u>Total cost</u>= FC + vc*Q

Where ,

FC=Fixed cost

vc=unitary variable cos

Q=produce quantity

<u>Revenue</u>= Price * Q

Break even FC + vc*Q=Price * Q

Isolating Q

FC=(Price * Q)-(vc*Q)

FC=(Price-vc) * Q

Q= FC/(Price-vc)

Q= $1000/($10-$5)

Q= $1000/$5

Q=  200 units

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