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You run a manufacturing facility that makes roller skates. Fixed monthly cost is $50,000 in mortgage, $3,000 per employee on average in salaries (you have 40 employees) and $20,000 in other expenses. The cost of raw materials is $2 per skate, and other costs per skate average to about $1. You sell the skates for $19.95 each.
How many skates must you sell to breakeven?
Define the random variable X.
Express Total Revenue, Fixed Cost, Variable Cost, Total Cost, and Profit in terms of X.
Calculate Breakeven point.

Respuesta :

Answer and Explanation:

The computation is shown below:

Let us assume the Breakeven point be X

Now

Total revenue = $19.95.X

And,

Total cost  is

= Total fixed cost + Total variable cost

= $190,000 + 3.X

Also as we know that At Breakeven point,

Total revenue = Total cost

19.95.X = $190,000 + 3.X

16.95.X = $190,000

X = $190,000 ÷ $16.95

= 11,209.43 units

Therefore the break even point is 11,209 units

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