A manufacturer sells his product at 23 per unit selling all

A manufacturer sells his product at $23 per unit, selling all he produces. His fixed cost is $18,000 and his variable cost per unit is $18.50. The level of production at which the manufacturer breaks even is...       a) 3000 units   b) 3500 units   c) 4000 units   d) 4500 units   e) 5000 units

Solution

Dear Student Thank you for using Chegg !! Selling price of product = 23 $ Fixed Cost = 18000 $ Variable Cost per unit = 18.5 $ Now break even point comes when SP = CP for n sold items Therefore Total SP for n items = 23n Total CP for n items = 18.5n + 18000 For breakeven point 23n = 18.5n + 18000 4.5n = 18000 n = 4000 Units Hence solution is option 3 i.e. 4000 Units