You manufacture office desks in your plant. The fixed costs for the plant is $20,000/year. The variable cost for each desk is $30. You sell the desks for $70.
How many desks must you sell to break-even?
if you want to make a profit of $10,000, how many desks must you sell?
If the marketing department determines that the demand is 300 desks, how much would you have to charge to break-even?
Office desks
Sell price= 70 per unit
Fixed cost= $ 20,000
Variable cost= $30 per unit
Profit= 70-30= 40 per unit
The total unit produced is x, then the total profit will be Y
Total profit= Profit per piece*x - Fixed cost
Y= 40*x – 20,000
For breakeven Y= 0
0= 40*x – 20,000
Answer 1: X = 500 desks
For profit of 10,000. Y= 10,000
10,000= 40*x – 20,000
40*x= 30,000
Answer 2: X = 750 desks
If no. of units sold is 300, x= 300 desks
To make Y= 0 in ,
Y= (sell price-30)*x – 20,000
0= (sell price-30)*300 – 20,000
=>20,000/300 = sell price-30
=>200/3 + 30 = sell price
Answer 3 => sell price= $96.67
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