A manufacturing business has total fixed costs of $200,000. It sells its product for $900 but it costs $600 to manufacture each unit. How many units must the company sell to break even?

Question

Layne

Mathematics

7 January, 12:56

A manufacturing business has total fixed costs of $200,000. It sells its product for $900 but it costs $600 to manufacture each unit. How many units must the company sell to break even?

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Answers (1)

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Rene Barber · Answer 1

If x is the number of units, 600x dollars is the cost of manufacturing all the units, and 900x dollars is the revenue of the sales.

Break even is when the cost=revenue.

200000+600x=900x. 300x=200000, x=200000/300=2000/3=667 approx. There is a small profit of $100 but 666 units actually incurs a loss of $200. The break-even seems to be 667 units.