PROBLEM #3 A plant operation has fixed costs of $2,000,000 per year, and its output capacity is 100,000 electrical appliances per year. The variable cost is $40 per unit, and the product sells for $90 per unit. a. What is the break-even point in terms of units? b. What is the break-even point in terms of dollars? c. How much capacity has been used?

PROBLEM #3 A plant operation has fixed costs of $2,000,000 per year, and its output capacity is 100,000 electrical appliances per year. The variable cost is $40 per unit, and the product sells for $90 per unit. a. What is the break-even point in terms of units? b. What is the break-even point in terms of dollars? c. How much capacity has been used?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

PROBLEM #3
A plant operation has fixed costs of $2,000,000 per year,
and its output capacity is 100,000 electrical appliances
per year. The variable cost is $40 per unit, and the
product sells for $90 per unit.
a. What is the break-even point in terms of units?
b. What is the break-even point in terms of dollars?
c. How much capacity has been used?
d. If the variable cost is increased to $55, what is the
percent reduction (or increase) to the profit? What is
the break-even point in units now?

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