Question

Marcy owns the company Caps for Kids and sells her hand-knitted caps for $20 each. The variable cost per cap created is $10, and fixed costs are $10,000. What is Marcy’s breakeven point?

Answer 1

At breakeven point, the cost is equal to the revenue. This also means that the net profit is equal to zero. If we let x be the number of units sold or produced, the total costs and revenue are calculated as follows:

Total Cost = 10x + 10,000
Total Revenue = 20x

Equation both,
10x + 10,000 = 20x
The value of x from the equation is 1000.

Answer: 1000