Question

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. How many cords of wood would he have to split with this machine to break even

Answer 1

The correct answer is "2000 units".

Step-by-step explanation:

Given:

Fixed cost,

F = $50,000

Variable cost,

VC = $100 per unit

Price,

P = $125 per unit

Let the units to be sold be "x".

Throughout the case of breakeven,

⇒
`Total \ revenue=Total \ cost`

⇒
`125x=50000+100x`

On subtracting "100x" from both sides,

⇒
`125x-100x=50000+100x-125x`

⇒
`25x=50000`

⇒
`x=(50000)/(25)`

⇒
`=2000 \ units`