A plant has annual fixed costs of $100,000. Variable costs are $40,000 per year at 80% production capacity; annual revenues are $70,000 at this capacity. The selling price per unit is 335. a. At 80% capacity, what are annual sales in number of units? b. What is the variable cost per unit? c. What is the breakeven quantity?

A plant has annual fixed costs of $100,000. Variable costs are $40,000 per year at 80% production capacity; annual revenues are $70,000 at this capacity. The selling price per unit is 335. a. At 80% capacity, what are annual sales in number of units? b. What is the variable cost per unit? c. What is the breakeven quantity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

A plant has annual fixed costs of $100,000. Variable costs are $40,000 per year at 80%
production capacity; annual revenues are $70,000 at this capacity. The selling price per unit is
$35.
a. At 80% capacity, what are annual sales in number of units?
b. What is the variable cost per unit?
c. What is the breakeven quantity?

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