ABC’ company’s cost function for the next four months is C= 500,000 + 5q.
Required:
a)The break-even volume of sales if the selling price is Birr 6 per unit.
break-even is when revenue = cost, right?
revenue = price * quantity, so you need q such that
6q = 500,000 + 5q
A manufacturing company has a total fixed cost of Br 5000 and a unit Variable cost of Br 5 . if the company can sell what it produce at a price of Br 10 then
A. Write the revenue cost and profit function
B. Find berake even point in terms of quantity and sales volume
To find the break-even volume of sales, we need to determine the quantity (q) at which the total cost (C) equals the total revenue (R).
Given:
Cost function: C = 500,000 + 5q
Selling price: Birr 6 per unit
Break-even volume of sales can be calculated using the following formula:
Total Cost (C) = Total Revenue (R)
Plugging in the given information:
500,000 + 5q = 6q
Now, let's solve for q:
500,000 = 6q - 5q
500,000 = q
So, the break-even volume of sales is 500,000 units at a selling price of Birr 6 per unit.
To find the break-even volume of sales, we need to determine the level of sales at which the company does not make a profit or a loss. In other words, the revenue from sales should be equal to the cost incurred.
The revenue from sales can be calculated by multiplying the selling price per unit by the number of units sold. In this case, the selling price per unit is Birr 6.
So, the revenue from sales (R) is given by:
R = selling price per unit * number of units sold
R = 6q
The cost function for ABC' company is given as C = 500,000 + 5q.
To find the break-even volume of sales, we equate the revenue from sales to the cost incurred:
6q = 500,000 + 5q
To solve this equation and find the break-even volume (q), we need to isolate q:
6q - 5q = 500,000
q = 500,000
Therefore, the break-even volume of sales is 500,000 units.