Homework Help: Algebra

Posted by Rick on Sunday, February 19, 2012 at 8:53pm.

The Oliver Company plans to market a new product. Based on its market studies, Oliver estimates that it can sell up to 4,500 units in 2005. The selling price will be $2 per unit. Variable costs are estimated to be 20% of total revenue. Fixed costs are estimated to be $6,400 for 2005. How many units should the company sell to break even?

How do I calculate the units to break even? What type of formula do I use?

Algebra - Steve, Monday, February 20, 2012 at 11:07am
revenue = units * price/unit
r = 2x for x units

var cost = .2r
fix cost = 6400

total cost c = 6400 + .2(2x)
total revenue = 2x

breakeven when cost = revenue
2x = 6400 + .4x
1.6x = 6400
x = 4000

so, at 4000 units,

revenue = 8000
cost = 6400 + .2(8000) = 8000

Answer this Question

Related Questions

Math - The Oliver Company plans to market a new product. Based on its market ...
Business - Describe two criteria used to assess a market's potential for a ...
Business - Describe two criteria used to assess a market's potential for a ...
Economics - Describe two criteria used to assess a market’s potential for a...
Marketing - Supposed you have been hired as a Marketing manager in a Food ...
marketing managment - Supposed you have been hired as a Marketing manager in a ...
internationnal economics - Based on Price/cost, what are the steps the managers ...
LAW - On Sunday, in a telephone conversation, Oliver agreed to grant Yana an ...
Economics M/C - The market in which the assumption of continuous market clearing...
managment science - Supposed you have been hired as a Marketing Manager in a ...

For Further Reading

First Name:
School Subject:
Answer: