Assume a fixed cost of 900 a variable cost of 475 and a sell

Assume a fixed cost of $900, a variable cost of $4.75, and a selling price of $6.00.

a. What is the break-even point? (Roundup your answer to the next whole number.)

b. How many units must be sold to make a profit of $500.00? (Roundup your answer to the next whole number.)

c. How many units must be sold to average $0.25 profit per unit? (Roundup your answer to the next whole number.)

Fixed cost (FC) = $900

Variable cost(VC) = $4.75

Revenue (R) = $6

a) Break even point = FC / (R - VC) = 900/(6-4.75) = 900/1.25 = 720 units

b) If profit (P) = $500, volume of output (Q) can be calculated using the following equation

P = Q(R-VC) - FC

=> 500 = Q(6-4.75)-900

=> 500 = 1.25Q - 900

=> 1.25Q = 500+900

=> 1.25Q = 1400

=> Q = 1400/1.25

=> Q = 1120

So 1120 units must be sold to make a profit of $500

C) If the volume of output is Q and per unit profit = $0.25,Total profit(P) = 0.25Q

P = Q(R-VC) - FC

=> 0.25Q = Q(6-4.75) - 900

=> 0.25Q = 1.25Q - 900

=>1.25Q - 0.25Q = 900

=> Q = 900

So 900 units must be sold to average $0.25 profit per unit