Thread: [SOLVED] Break Even costs

Ok I have completed this question i just want to make sure i did it right.

Question is: A company produces and sells 15,300 sound cards per year. They sell each of the cards for $104 wholesale; the cards cost $69.75 each to produce. The company's fixed costs per year to produce sound cards is 320,000.

a) what is the break even point on sound cards in terms of dollar value and units sold.

b) If demand increases and the selling price of the sound cards increase 10%. what is the new break even point?

Thanks in advance for any replies

Originally Posted by shobden

Ok I have completed this question i just want to make sure i did it right.

Question is: A company produces and sells 15,300 sound cards per year. They sell each of the cards for $104 wholesale; the cards cost $69.75 each to produce. The company's fixed costs per year to produce sound cards is 320,000.

a) what is the break even point on sound cards in terms of dollar value and units sold.

revenue = N*p

costs = N*u+f

where N is the number of cards sold, and p is the selling price, u the unit costs, and f the fixed costs. Then the breakeven point is when:

revenue=costs,

or:

N*p=N*u+f

b) If demand increases and the selling price of the sound cards increase 10%. what is the new break even point?

Thanks in advance for any replies

Use new selling price of p'=1.1*p

RonL