BreakEven Analysis A division of Carter Enterprises produces

Break-Even Analysis A division of Carter Enterprises produces \"Personal Income Tax\" diaries. Each diary sells for $8. The monthly fixed costs incurred by the division are $25,000, and the variable cost of producing each diary is $3. Find the break-even point for the division. What should be the level of sales in order for the division to realize a 15% profit over the cost of making the diaries?

Solution

solution-:

Let the number of diaries sold be given by X
The price per diary is $8, so the price of Nd diaries is 8 $
Per month, the cost is 25,000 + 3X

The break even is the sum equals zero

+8 X - 25000 - 3 X = 0
5 X = 25000
X = 5000

b)

To get a 15% profit over the cost of making the diaries
+8 X - 25000 - 3 X = 0.15 * (25000 + 3 X) = 3750 + 0.45 X
( 5 - 0.45 ) X = 25000 + 3700
4.55 X = 28750
X = 6318.68
To make 15%, need to sell 6319 diaries