Plant Bottling needs to reduce the selling price of its acrylic water bottles in order to be competitive.Currently, it has fixed costs of $110,000 and variable costs per unit of $4.10.If Plant Bottling can sell 40,000 units, what price should it charge in order to break-even?

Question

Quizplus · Accepted Answer

To break even, total revenue must equal total costs. The total costs can be broken down into fixed costs and variable costs, which are $110,000 and $4.10 per unit, respectively. Let's call the selling price "x".

So, total revenue = x * 40,000

Total costs = fixed costs + variable costs = $110,000 + ($4.10 * 40,000) = $266,000

To break even, x * 40,000 = $266,000

Solving for x, we get x = $6.65

Therefore, Plant Bottling should charge $6.85 to make a profit.

Plant Bottling Needs to Reduce the Selling Price of Its