Question
Download Solution PDFA toy manufacturing factory has annual capacity of toys. If the fixed are rupees 1 lakh/year, variable cost rupees 20 per unit and the selling price rupees 40 per unit, the quantity to break-even is units.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFConcept:
\({\rm{Break\;even\;point}} = \frac{{Total\;fixed\;cost\;\left( {TFC} \right)}}{{Price\;per\;unit\;\left( P \right) - Variable\;cost\;\left( {V.C.} \right)}}\)
Calculation:
Given:
Total fixed cost (TFC) = 100000, P = 40, VC = 20.
\(Break~even ~point = {100000\over40-20} =5000\).
Hence, the quantity of break-even is 5000 units.
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