Respuesta :
Answer:
6945 is the break-even quantity if pen sells for $4 each.
Step-by-step explanation:
We are given the following in the question:
Demand of pens = 31,000
Fixed cost = $25,000 per month
Variable cost per pen = 40 cents = $0.4
Selling price of each pen = $4
Let q be the break even quantity,
Then we can write:
[tex]\text{Selling price}(q) = \text{Fixrd cost} + \text{Variable cost}(q)[/tex]
Putting values, we get,
[tex]4q = 25000 + 0.4q\\(4-0.4)q = 25000\\3.6q = 25000\\q = 6944.44 \approx 6945[/tex]
Thus, 6945 is the break-even quantity if pen sells for $4 each.
Answer: the break-even quantity is 6944
Step-by-step explanation:
Let x represent the break-even quantity.
Fixed costs of $25,000 per month are allocated to the felt-tip operation, and variable costs are 40 cents(40/100 = $0.4) per pen. This means that the total cost of producing x pens for the forth coming month would be
0.4x + 25000
if pens sell for $4 each, it means that the total revenue from selling x pens would be
4x
At the point of break even, the total cost = total revenue
Therefore,
4x = 0.4x + 25000
4x - 0.4x = 25000
3.6x = 25000
x = 25000/3.6
x = 6944 to the nearest whole number
