A company is planning to introduce a new product soon and would like you to help
ID: 1211527 • Letter: A
Question
A company is planning to introduce a new product soon and would like you to help determine the minimum price it must charge to break even. The fixed costs for the new product are 144,385,000 Venezuelan bolivarss. The total variable costs are 125,200,000 bolivars, and the forecasted sales for the first year of sales of the product is 100,000 units. What is the break-even price? A company is planning to introduce a new product soon and would like you to help determine the minimum price it must charge to break even. The fixed costs for the new product are 144,385,000 Venezuelan bolivarss. The total variable costs are 125,200,000 bolivars, and the forecasted sales for the first year of sales of the product is 100,000 units. What is the break-even price? A company is planning to introduce a new product soon and would like you to help determine the minimum price it must charge to break even. The fixed costs for the new product are 144,385,000 Venezuelan bolivarss. The total variable costs are 125,200,000 bolivars, and the forecasted sales for the first year of sales of the product is 100,000 units. What is the break-even price?Explanation / Answer
Let the break-even price be $x per unit. At this price, the total cost spent by the company should be equal to the total revenue generated.
Total cost, the sum of fixed and variable cost, is given by 144,385,000 + 125,200,000 = 269,585,000 bolivars.
Total revenue is the product of price and quantity so it is given by $x*100,000 = $100,000x.
Break-even point gives TR = TC so
$100,000x = 269,585,000
x = 2,695.85 per unit
So the break-even price is 2,695.85 per unit
Related Questions
Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.