A manufacturer of 24-hr variable timers, has a monthly fixed cost of $56,000 and a production cost of $9 for each timer manufactured. The units sell for $16 each. Find the break-even point algebraically.
A) break-even production 16,000 units; break-even revenue $1,280,000
B) break-even production 16,000 units; break-even revenue $128,000
C) break-even production 8,000 units; break-even revenue $1,280,000
D) break-even production 8,000 units; break-even revenue $128,000

Question

Quizplus · Accepted Answer

We can use the formula for break-even point:
Break-even point = Fixed cost / (Selling price per unit - Variable cost per unit)

Plugging in the given values, we get:
Break-even point = 56000 / (16 - 9)
Break-even point = 8000

Therefore, the break-even production is 8,000 units.

To find the break-even revenue, we can multiply the break-even production by the selling price per unit:
Break-even revenue = 8000 * 16
Break-even revenue = 128,000

Therefore, the correct answer is option D, with a break-even production of 8,000 units and a break-even revenue of $128,000.

A Manufacturer of 24-Hr Variable Timers, Has a Monthly Fixed