break-even is when cost = revenue, so
1329050 + 4.80x = 12.40x
The Francesco Company produces spaghetti sauce that is used in restaurants. The fixed costs total $1,329,050. The selling price per 64 oz. can of sauce is $12.40. The variable cost per can is $4.80. What is the break-even point in number of cans?
3 answers
I just don't get it
what's the trouble? They said that there is a fixed cost of $1329050, regardless of how many cans are made. That's rent, payroll, etc.
Add to that a variable cost, which depends on the number of cans. $4.80 for each can.
So, the total cost for x cans is 1329050 + 4.80x
The revenue is the sales of the cans. Each can sells for $12.40, so if they sell all x cans, they get 12.40x dollars.
Now set cost=revenue to get the break-even.
You clearly need to review the material in this chapter of your text.
Add to that a variable cost, which depends on the number of cans. $4.80 for each can.
So, the total cost for x cans is 1329050 + 4.80x
The revenue is the sales of the cans. Each can sells for $12.40, so if they sell all x cans, they get 12.40x dollars.
Now set cost=revenue to get the break-even.
You clearly need to review the material in this chapter of your text.
1 answer