Digital Displays Inc. makes computer monitors and sells them for $320 each. To break even, it needs to sell 510 monitors per month. If the fixed costs are $8,900 per month, what is the variable costs per monitor?

Round to the nearest cent

To determine the variable cost per monitor, we can use the break-even formula:

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

Given:
- Break-even point = 510 monitors
- Fixed costs = $8,900
- Selling price per monitor = $320

Let's denote the variable cost per monitor as $ V $.

The break-even formula can be rearranged to solve for $ V $:

\[
510 = \frac{8900}{320 - V}
\]

Now, solve for $ V $:

1. Multiply both sides by $ (320 - V) $:

\[
510 \times (320 - V) = 8900
\]

2. Distribute $ 510 $ on the left side:

\[
163200 - 510V = 8900
\]

3. Subtract 8900 from 163200:

\[
154300 = 510V
\]

4. Divide both sides by 510:

\[
V = \frac{154300}{510} \approx 302.55
\]

So, the variable cost per monitor is approximately **$302.55**.

Would you like any further details or have any questions? Here are some related problems you might find interesting:

1. What would be the break-even point if the variable costs were reduced by $10?
2. How would the profit change if 600 monitors are sold instead of 510?
3. What is the total revenue at the break-even point?
4. If fixed costs increase by $1,000, what is the new break-even point?
5. How many monitors must be sold to achieve a profit of $5,000?
6. What would be the impact of a 5% decrease in the selling price on the break-even point?
7. How do changes in fixed costs impact the variable cost per monitor?
8. What is the total cost per monitor when including both fixed and variable costs at the break-even point?

**Tip:** Understanding the relationship between fixed costs, variable costs, and the selling price is crucial for analyzing the financial health of a business.

Learn how to calculate variable costs per monitor using break-even analysis. Digital Displays Inc. sells monitors for $320 each with fixed costs of $8,900 per month and aims to break even at 510 monitors sold per month. Discover the step-by-step calculation for variable costs and related financial analysis.

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