Question

The Oliver Company plans to market a new product. Based on its market studies, Oliver estimates that it can sell up to 7,200 units in 2005. The selling price will be $1 per unit. Variable costs are estimated to be 20% of total revenue. Fixed costs are estimated to be $5,400 for 2005. How many units should the company sell to break even?

Answer 1

Let x=Sales

x=0.2x+5400
0.8x=5400
x=6750 units need to besold to break even