Question

Use the numerical method to calculate the break-even point of a wine company that sells a 1000 litres of wine per week at R12 per litre.They produce the wine at R8 per litre and their total fixed cost to operate their plant and to produce their wine is R2000 per week

Answer 1

breakeven point = R 10,000

Step-by-step explanation:

Selling price

wine sold per week = 1000 l

selling rate = R12/l

Total selling price per week = 1000 x 12 = R12000

Cost price

running cost of producing wine = R8/l

total running cost of producing wine = 8 x 1000

= R8000

fixed cost to operate plant = R2000

Toatl cost price per week = 8000 + 2000

= R10000

So the break even point is R10000 which is total cost per week

company is in profit as R2000 is profit

Profit = total selling price - total cost price

12000 - 10000

=R 2000