Question

A cell phone company has a fixed cost of $1,000,000 per month and a variable cost of $20 per month per subscriber. The company charges $29.95 per month to its cell phone customers. (2) a. What is the breakeven point for this company?

Answer 1

$100,502.51

Explanation:

Fixed cost of cellphone F = $1,00,000

variable cost per unit v = $ 20

and the selling cost per unit c = $29.95

break even point=
`(F)/(s-v)`

`=(1,000,000)/(29.95-20)`

= $100,502.51 is the break even point of sale.

Break even is the point where there is no loss and no gain to the organization.