A manufacturer sells his product at $23 per unit,selling all he produces.His fixed cost is $18,000 and his variable cost per unit is $18.50.The level of production at which the manufacturer breaks even is

Question

Quizplus · Accepted Answer

To break even, the total revenue earned by the manufacturer must be equal to the total costs incurred. Let's first calculate the total cost for producing x units:

Total Cost = Fixed Cost + Variable Cost * Number of Units
Total Cost = $18,000 + $18.50x

Now let's calculate the revenue earned by selling x units:

Revenue = Price per Unit * Number of Units
Revenue = $23x

To break even, we need to set these two equations equal to each other and solve for x:

$18,000 + $18.50x = $23x
$4.50x = $18,000
x = 4,000 units

Therefore, the manufacturer will break even by producing and selling 4000 units.

A Manufacturer Sells His Product at $23 Per Unit,selling All