Question

A company has annual fixed costs of $2983007 and variable costs of $0.73 per unit produced. If the company charges $1.88 per unit for their product, what is the breakeven annual production quantity? Assume that the demand is unlimited.

Answer 1

@DanJS

Answer 2

@DanJS

Answer 3

Total cost = total fixed cost + total variable cost

Answer 4

looks like you get a cost function, and a revenue function, let x be the units produced

C(x) = 0.73*x + 2983007
R(x) = 1.88*x

what is the break even thing, just have the cost and the revenue the same value?

Answer 5

amount of units to produce to break even i guess

Answer 6

Can you please show me or we can discuss how we analyze this type of problem?

Answer 7

yes I believe you are correct. Are we using the idea of the equation i posted?

Answer 8

looks like you understood the idea for the cost function and revenue

total $ = initial amt or fixed value + number of something*value

Answer 9

the cost is the fixed value plus the cost of each unit made

Answer 10

revenue is just the sale price times how many sold here


solve for units x, when C(x) = R(x)

Answer 11

So the variable cost is the change in the unit cost?, hence varible?

Answer 12

total cost = total revenue?

Answer 13

just a fancy word, the cost there changes depending on how many units are made, so it is variable i guess

Answer 14

In my textbook they use "total variable cost"

Answer 15

so total cost is given by C(x)?

Answer 16

what is your book meaning for 'breakeven annual production quantity', i am guessing just figure the amount of units x, that will have cost = revenue for the whole year

Answer 17

0.73*x + 2983007 = 1.88x

Answer 18

yeh,
http://smallbusiness.chron.com/calculate-annual-break-even-units-revenue-68275.html

Answer 19

text says

break even point: The level of activity at which total cost for the product, good, or service are equal to the revenue generated. This is the level at which one "just breaks even"

The math part I get... I want to understand how the solution part of it.

Answer 20

Thanks for your help.

Answer 21

x=2.59x10^6

Answer 22

right, break even, cost = revenue, no profits

Answer 23

welcome