Question

If the selling price is $10 and the fixed costs are $10000, and the variable costs per unit are $5, what is the break-even point in units and in dollar sales volume?

Answer 1

Answer:

2000 units

Step-by-step explanation:

u = units sold

p = selling price

c = unit cost

Revenue = u × p

Costs = fixed costs + (c × u)

Profit = revenue - costs

Revenue = 10 × u

Revenue = 10u

Costs = 10000 + (5 × u)

Costs = 10000 + 5u

Breakeven means profits = 0:

Profits = 10u - (10000 + 5u) = 0

10u - 10000 - 5u = 0

5u - 10000 = 0

5u = 10000

u = 2000