Break-even Analysis
A company sells a product for $40 per unit. The variable cost per unit is $25, and the company's fixed cost are $30,000. How many units must the company sell to break even?

To calculate the break-even point (in units), you can use the following formula:

\[
\text{Break-even point (in units)} = \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}
\]

Given:
- Selling Price per Unit = $40
- Variable Cost per Unit = $25
- Fixed Costs = $30,000

Now substitute the values into the formula:

\[
\text{Break-even point (in units)} = \frac{30,000}{40 - 25} = \frac{30,000}{15} = 2,000
\]

The company must sell **2,000 units** to break even.

Would you like a detailed explanation of the steps involved?

Here are some related questions:
1. What would happen to the break-even point if the selling price per unit increased?
2. How does a change in fixed costs affect the break-even point?
3. If the variable cost increases by $5, how many additional units must be sold to break even?
4. What is the profit if the company sells 2,500 units?
5. How would adding an additional product line affect the break-even analysis?

**Tip:** Always monitor both variable and fixed costs in your business to ensure pricing remains profitable!

A company sells a product for $40 per unit. The variable cost per unit is $25, and the company's fixed cost are $30,000. How many units must the company sell to break even?

Learn how to calculate the break-even point for a product with a selling price of $40, variable cost of $25 per unit, and fixed costs of $30,000. This break-even analysis applies basic linear equations in business settings. Suitable for high school and introductory college-level students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation