Question

GlassWorks Products manufactures mirror panels for hotels. GlassWorks manufactures 450,000 mirror panels each year to be sold to hotels at $135.00 per panel. The fixed costs are estimated to be $108,000. Variable costs are $78.00 per panel. How many panels must GlassWorks sell to break even?

Answer 1

To determine the break even sales, equate the total revenue to total cost. Allow x to represent the number of panels GlassWorks should sell, the break even analysis becomes,

$135x = $108,000 + $78x

Solving for x gives an answer of x = 1894.73 which is approximately 1895. Thus, GlassWorks should sell 1895 panels.