EBK ENGINEERING ECONOMY
EBK ENGINEERING ECONOMY
8th Edition
ISBN: 8220103675437
Author: Blank
Publisher: YUZU
Question
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Chapter 13, Problem 1P

(a):

To determine

Break-even quantity.

(a):

Expert Solution
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Explanation of Solution

Revenue per unit (RP) is $89. Variable cost (VC) is $45. Fixed cost (F) is $5,000,000.

Break-even quantity (BQ) can be calculated as follows:

BQ=FRPVC=5,000,0008945=5,000,00044=113,636

Break-even quantity is 113,636 units.

(b):

To determine

Calculation of profit.

(b):

Expert Solution
Check Mark

Explanation of Solution

Profit for selling (S) 100,000 units can be calculated as follows:

Profit=(S×(RPVC))F=(100,000×(8945))5,000,000=4,400,0005,000,000=600,000

There is a loss of $600,000.

Profit for selling (S) 200,000 units can be calculated as follows:

Profit=(S×(RPVC))F=(200,000×(8945))5,000,000=8,800,0005,000,000=3,800,000

There is a profit of $3,800,000.

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