Question

What is the minimum number of ovens that Kitchen Appliances needs to produce and sell in order to break even, considering a variable cost of $200 per oven, annual fixed costs of $300,000, and an estimated selling price per oven?

a) $300,000
b) $500,000
c) 1500 ovens
d) 2500 ovens

Answer 1

To calculate the minimum number of ovens needed to break even, we need to consider fixed and variable costs.

Step-by-step explanation:

In order to calculate the minimum number of ovens that Kitchen Appliances needs to produce and sell to break even, we need to consider the fixed and variable costs. Fixed costs are expenses that do not change regardless of the number of ovens produced, while variable costs are expenses that change with the number of ovens produced. The break-even point occurs when the total revenue equals the total cost. Let's assume the estimated selling price per oven is $x. The total cost can be calculated as: fixed costs + (variable cost per oven * number of ovens).

Mathematically, this can be represented as: $300,000 + ($200 * x) = x * selling price per oven.

To find the minimum number of ovens needed to break even, we need to solve the equation for x. Once we find the value of x, we will be able to determine the number of ovens needed.

In conclusion, we need more information about the estimated selling price per oven to determine the minimum number of ovens needed to break even.