A rotational molding operation has fixed costs of 7000 per y

A rotational molding operation has fixed costs of $7,000 per year and variable costs of $53 per unit. If the process is automated via conveyor, its fixed cost will be $27,000 per year, but its variable cost will be only $10 per unit. Determine the number of units each year necessary for the two operations to break even. The number of units each year necessary for the two operations to break even is determined to be ______.

Solution

At breakeven total cost of both methods should be equal.

Let number of units produced each year be x

7000 + 53x = 27000 + 10x

43x = 20000

x= 465.116