Question

An engineer is selling miniature steam engines for $60 each. How many miniature steam engines would the engineer have to sell ln 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

Answer 1

To calculate the break-even point, consider the fixed costs and variable costs per unit. The engineer needs to sell 91 miniature steam engines to break even.

Step-by-step explanation:

To calculate the break-even point, we need to consider the fixed costs and the variable costs per unit.

The fixed costs are $5,000.

The variable cost per miniature steam engine is $5.

The selling price per miniature steam engine is $60.

To break even, the total revenue needs to cover the total costs.

The total costs consist of the fixed costs plus the variable costs.

Let's denote the number of miniature steam engines to be sold as x.

The total costs can be calculated as follows:
Total Costs = Fixed Costs + (Variable Costs per unit * Number of units sold)
Total Revenue = Selling Price per unit * Number of units sold

Setting the total revenue equal to the total costs, we can solve for x:
Total Revenue = Total Costs
$60x = $5,000 + $5x
55x = $5,000
x = 91.

So, the engineer would have to sell 91 miniature steam engines to break even.