Toys 4 u manufactures a toy that it sells for $30 each. The variable cost per toy is $10 and the fixed cost for this product line are $100 000 per year .

a) what is the break even point in units?

b) what is the break even sales revenue ?

Printable View

- Jun 15th 2009, 03:38 PMdiehardmath4Break even point ( urgent )
Toys 4 u manufactures a toy that it sells for $30 each. The variable cost per toy is $10 and the fixed cost for this product line are $100 000 per year .

a) what is the break even point in units?

b) what is the break even sales revenue ? - Jun 15th 2009, 04:54 PMJhevon
- Jun 15th 2009, 05:38 PMdiehardmath4
this is what i attempted for part a

given = MP ( market price )

VC ( variable cost )

FC ( fixed cost )

P ( profit )

q ( quantity )

MP = 30

VC = 10

FC = 100 000

P = 0

Tc = FC + VC (q )

TC = 100 000 + 10(q)

Sub in values into 1

0 = R - tc

( mp ) (q) - tc

0 - ( 10 ) (q) - tc

0 = 10q - [ 100 000 + q ]

0 = 10q -100 000 - q

100 000 = 9q

q = 11 111 . 11

i got the answer wrong but not sure where i went wrong or what i did wrong - Jun 15th 2009, 06:08 PMJhevon
- Jun 16th 2009, 05:52 AMdiehardmath4
so after MP - TC = 30q - (100 000 + 10q)= 0

you get MP - TC = 30Q - 100 000 - 10q

MP - TC = 20q - 100 000

when you bring the - 100 000 to the other side what happens to MP - TC ? - Jun 16th 2009, 10:33 AMJhevon