Question
a manufacturer of games sell each copy for 21.95.the manufacturing cost of each copy is 14.92. monthly fixed cost is 8500. during the 1st month of sales of a new game,how many copies must be sold in order to get break-even(that is,in order that total revenue equal total cost)?
Asked by: USER2238
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Answer (277)
The break-even point is calculated as -
Break-even point (in units) = Fixed cost ÷ Contribution margin per unit
Here,
Selling price = $ 21.95
Variable cost (manufacturing costs) = $ 14.92 (since, costs bifurcation is not given, the manufacturing costs are taken as variable costs)
Contribution per unit = Selling price - Variable cost (manufacturing costs)
Contribution per unit = $ 7.03
Fixed cost (monthly) = $ 8500
Now,
Break-even point (in units) = $ 8,500 ÷ $ 7.03
Break-even point (in units) = 1,209.1 or 1210 games