Machine #1 has total annual fixed cost of $8,500 and a corresponding range of output of 0 to 300.Machine #2 has total annual fixed cost of $10,000 and a corresponding range of output of 301 to 600.Machine #3 has total annual fixed cost of $15,000 and a corresponding range of output of 601 to 900.Variable cost is $10 per unit and revenue is $40 per unit.What is the break-even point for each machine?

Question

Quizplus · Accepted Answer

The break-even point is calculated by dividing the fixed costs by the contribution margin per unit (revenue per unit - variable cost per unit). For Machine #1: $8,500 / ($40 - $10) = 283.33 units. For Machine #2: $10,000 / ($40 - $10) = 333.33 units. For Machine #3: $15,000 / ($40 - $10) = 500 units.

Machine #1 Has Total Annual Fixed Cost of $8,500 and a Corresponding