Question

The Astronomical Telescope shop plans to introduce a new model based on the following information: Rent and utilities per period are $ {fixed}; variable cost per unit is $ 217; selling price per unit is $ 305; determine the break-even point in units if rent and utilities are increased to $ 5420.

Answer 1

Using the profit concept, it is found that the break-even point is of 61.6 units.

• Profit is given by revenue subtracted by cost.
• The break-even point is when the revenue is the same as the cost, which means that the profit is zero.

In this problem:

• Variable cost per unit x of $217, fixed cost of $5,420, thus, the cost equation is given by:

$C(x) = 217x + 5420$

Selling price per unit of $305, thus, the revenue equation is given by:

$R(x) = 305x$

The break-even point is the value of x for which:

$R(x) = C(x)$

Then

$305x = 217x + 5420$

$88x = 5420$

$x = \frac{5420}{88}$

$x = 61.6$

The break-even point is of 61.6 units.

A similar problem is given at brainly.com/question/4001746