Edgar and Sons a local manufacturer of a product that sells

Edgar and Sons, a local manufacturer of a product that sells for $13.50 per unit. Variable cost per unit is $7.85 and fixed cost per period is $1 220. Capacity per period is 1100 units.

Perform a break-even analysis showing

a) an algebraic statement of

            (i) the revenue function;

            (ii) the cost function;

            (iii) calculate the break-even point in units.

b) a detailed break-even chart.

Solution

Let us assume Quantity produced to be \"q\", with q less than/equal to 1100

Thus, Total Revenue = 13.50q

Total Cost = Fixed Cost + Variable Cost

= 1220 + 7.85q

iii). Break even point = Total Cost = Total Revenue

13.50q = 1220 + 7.85q