Question

A furniture manufacturer specializes in wood tables. The tables sell for $140 per unit and incur $49 per unit in variable costs. The company has $11,020 in fixed costs per month. Calculate the breakeven point in units under each independent scenario.

Variable costs increase by $15 per unit.

Answer 1

The breakeven point in units is approximately 122 units.

Step-by-step explanation:

To calculate the breakeven point in units, we need to find the point where total revenue equals total cost. Total cost is the sum of fixed costs and variable costs. In this scenario, the fixed costs are $11,020 per month. The variable costs are $49 per unit. Let x be the number of units sold. The total cost is then given by:

Total cost = Fixed cost + Variable cost

Total cost = $11,020 + $49x

Total revenue is given by:

Total revenue = Selling price per unit x Number of units sold

Total revenue = $140x

Setting the total revenue equal to the total cost, we can solve for x:

$140x = $11,020 + $49x

$91x = $11,020

x ≈ 121.09 units

Rounding up to the nearest whole number, the breakeven point in units is approximately 122 units.