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henryshanelle
College Mathematics 5+3 pts


A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units. a) Calculate the break-even point (i) in units (ii) in dollars (iii) as a percent of capacity b) Draw a detailed break-even chart. c) Calculate the break-even point (in units) if fixed costs are reduced to $7020.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $78.00

Answer 1

ai.) Let the number of units sold be x, then
57x = 18x + 7800
57 - 18x = 7800
39x = 7800
x = 7800/39 = 200
Therefore, Break-even point in units is 200 units
 
ii.) Break-even point in dollars = 57 x 200 = $11,400

iii) Break-even point as a percent of capacity = 200/500 x 100 = 40%

c) If fixed costs are reduced to 7020, then
57x = 18x + 7020
39x = 7020
x = 180

d.) If the sellinn price is increased to $78, then
78x = 18x + 7800
78x - 18x = 7800
60x = 7800
x = 7800/60 = 130