Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What is the break-even point in revenue per month?
A) $70,000
B) $75,480
C) $71,121
D) $73,215
E) $71,500

Question

Quizplus · Accepted Answer

The break-even point is the point at which total revenue equals total costs. Total revenue is equal to the price per toy multiplied by the number of toys sold. Total costs are equal to the variable cost per toy multiplied by the number of toys sold plus the total fixed costs. So, the break-even point is the point at which the price per toy multiplied by the number of toys sold equals the variable cost per toy multiplied by the number of toys sold plus the total fixed costs.In this case, the price per toy is $29.95, the variable cost per toy is $11, and the total fixed costs are $45,000. So, the break-even point is the point at which 29.95x = 11x + 45,000. Solving for x, we get x = 71,121. So, the break-even point in revenue per month is $71,121.

Kuldip's Factory Manufactures Toys That Sell for $29