Question

A company is planning to sell 200,000 units for $4 per unit. the contribution margin ratio is 25%. if the company will break even at this level of sales, what are the fixed costs? a company manufactures and sales a single product. during the year just ended, the company produced and sold 60,000 units at a price of br.20 per unit. variable manufacturing costs were br 8 per unit, and variable marketing costs were br 4 per unit . fixed costs amounted to br. 180,000 for manufacturing and br.72, 000 for marketing. what is breakeven point in units and birr for the year.

Answer 1

To calculate total revenue, multiply the number of units sold by the selling price. To calculate marginal revenue, subtract the total revenue of the previous output level from the total revenue of the current output level. To calculate the total cost, add the fixed costs to the variable costs.

Step-by-step explanation:

To calculate total revenue, multiply the number of units sold by the selling price. For example, multiplying 1 unit by $72 gives a total revenue of $72. Similarly, multiplying 2 units by $72 gives a total revenue of $144. You can continue this calculation for each output level.

To calculate marginal revenue, subtract the total revenue of the previous output level from the total revenue of the current output level. For example, subtracting $72 (the total revenue of 1 unit) from $144 (the total revenue of 2 units) gives a marginal revenue of $72.

To calculate the total cost, add the fixed costs to the variable costs. For example, for 1 unit, the total cost is $100 (fixed costs) + $64 (variable costs). For 2 units, the total cost is $100 + $84. You can continue this calculation for each output level.

To calculate marginal cost, subtract the total cost of the previous output level from the total cost of the current output level. For example, subtracting $164 (the total cost of 1 unit) from $184 (the total cost of 2 units) gives a marginal cost of $20.

Based on the table, you can sketch the total revenue and total cost curves on a diagram, with the quantity on the x-axis and the revenue/cost on the y-axis. The profit-maximizing quantity is the level of output where marginal revenue equals marginal cost.