It is estimated that sales in the comming period will be birr 6000 and that fixed cost will be birr 1000 and variable costs birr 3600. develop the total cost equation and the breakeven revenue?
The total cost equation can be developed by adding the fixed costs and variable costs together.
Total Cost = Fixed Cost + Variable Cost
Total Cost = 1000 + 3600
Total Cost = 4600 birr
The breakeven revenue is the point at which the total revenue generated equals the total cost incurred. To find the breakeven revenue, we need to set the total revenue equal to the total cost and solve for the sales.
Total Revenue = Total Cost
Sales * Price = 4600 birr
6000 * Price = 4600 birr
Price = 4600 birr / 6000
Price = 0.7667 birr per unit
Breakeven Revenue = Breakeven Sales * Price
Breakeven Revenue = 6000 * 0.7667
Breakeven Revenue = 4600 birr