The Metropolitan Company sells its latest product at a unit

The Metropolitan Company sells its latest product at a unit price of $7. Variable costs are estimated to be 40% of the total revenue, while fixed costs amount to $6,300 per month. How many units should the company sell per month in order to break even, assuming that it can sell up to 5,000 units per month at the planned price?

Solution

Let number of units sold = N

Therefore,

7N = 6300+2.8N

4.2N = 6300

N = 1500 units