Homework SourseA large manufacturing company is launching a new product to
A large manufacturing company is launching a new product to the market. The annual fixed cost is estimated to be $10,000, direct labor is $4.25 per unit, and the cost of materials is $5.00 per unit. The selling price of the product will be $12.50 per unit.
How many units of the new product need to be sold to break-even ? (Do not round intermediate calculations. Roundup your answer to the next whole number.)
How much revenue do we need to take in before breaking even? (Round your answer to the nearest dollar amount.)
| A large manufacturing company is launching a new product to the market. The annual fixed cost is estimated to be $10,000, direct labor is $4.25 per unit, and the cost of materials is $5.00 per unit. The selling price of the product will be $12.50 per unit. |
Solution
Breakeven point defined to be the point at which a company sells enough units of its product to cover its expenses without making a profit or taking a loss.
annual fixed cost estimated=$10,000
selling price = $12.50 per unit
At break even point company would sell 800 units ($10,000/$12.50)
