Question

A company makes and sells skateboards. Each skateboard is sold for $170. The cost to make each skateboard is $45
plus a fixed cost of $2,875 per month
• On a monthly basis, what is the breakeven point? Explain how you determined your answer

Answer 1

The breakeven point is when 23 skateboards are produced by the company.

Breakeven point is the point at which the revenue is equal to the cost. Hence the profit is 0.

Let us assume that the company makes x skateboards.

The cost = 45x + 2875

Revenue = 170x

At breakeven:

Revenue = cost

170x = 45x + 2875

125x = 2875

x = 23

Hence the breakeven point is when 23 skateboards are produced by the company.

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