To calculate the break-even point, you need to consider the fixed and variable costs. Using the given information, the engineer would need to sell 90 miniature steam engines to break even. option a. 91
To calculate the break-even point, we need to consider the fixed costs and the variable costs per unit.
The fixed costs in this case are $5,000.
The variable costs are $5 per miniature steam engine.
Let's assume the number of miniature steam engines sold is 'x'.
The equation to calculate the break-even point is:
Total Revenue = Total Costs
Revenue = selling price per unit * number of units sold = $60x
Cost = fixed costs + variable costs per unit * number of units sold = $5000 + $5x
Setting the revenue equal to the cost, we have:
$60x = $5000 + $5x
Simplifying the equation, we get:
$55x = $5000
Dividing both sides by $55, we find:
x = $5000 / $55 = 90.9090
Since you can't sell a fraction of a unit, you would need to round up to the nearest whole number because you can't sell a fraction of a steam engine. Therefore, the engineer would need to sell 91 miniature steam engines to break even.
question:
An engineer is selling miniature steam engines for $60 each. How many miniature steam engines would the engineer have to sell in order to break even if the fixed costs are $5,000 and the variable costs are $5 per miniature steam engine?
Select one:
a. 91
b. 127
C. 115
d. 102