Question

Q#2:
A company is planning to manufacture a certain product. The fixed cost will be $450,000 and it will cost $250 to produce each product. Each will be sold for $750. What is the profit equation and what is the break-even point?

Answer 1

P = 750x - (450000 + 250x)

For production and sell of 900 products there will be break-even point.

Step-by-step explanation:

The fixed cost to produce the product will be $450,000 and it will cost $250 to produce each product.

Again, Each product will be sold for $750.

If the number of product produced and sold is x, then the profit equation will be, P = 750x - (450000 + 250x) ........... (1) (Answer)

Now, for the break-even point, the profit will be zero.

Hence, from equation (1) we get,

750x = 450000 + 250x

⇒ 500x = 450000

⇒ x = 900

Therefore, for production and sell of 900 products there will be break-even point. (Answer)