For an organization producing a product, the fixed cost per month is Rs. 12000. The variable cost per product is Rs. 24. The unit selling price of the product is Rs. 48. To achieve break-even, the minimum production per month shall be

Concept:

If x number of units are produced in the system then

Total sale = sx

Fixed cost = F

variable cost = vx

and Profit = P, 

where s is the sale cost per unit and v is the variable cost per unit

Total sale = Total cost + Profit

sx = F + vx + P

At break-even point, Profit (P) = 0

So, sx = F + vx

\(x = \frac{F}{{s - v}}\)

Calculation:

Given, F = 12,000 Rs., v = 24 Rs. and s = 48 Rs.

Then,

\(x = \frac{12000}{{48 - 24}}=500 \;units\)