Based on the cost to Global Corp. to make the units and the selling price, the breakeven quantity is 4 units.
How can the breakeven quantity be found?
The breakeven quantity would be the point where the cost of the units is equal to the revenue.
At 3 units, the revenue is:
= 3 x 7
= $21
At 4 units, the revenue is:
= 7 x 4
= $28
At 5 units, the revenue is:
= 5 x 7
= $35
At the fifth unit, the revenue is less than the cost so the breakeven point is less than 5 units.
At the third unit the revenue is more than the cost so the breakeven point is more than 3 units.
After the 4th unit point, the cost becomes more than the revenue which means that 4 units is the approximate breakeven point.
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