A division of a corporation manufactures bicycle pumps. Each pump sells for $9, and the variable cost of producing each unit is 40% of the selling price. The monthly fixed costs incurred by the division are $50,000. What is the break-even point for the division?

Question

a) break-even production 1,852 units; break-even revenue $166,662
b) break-even production 1,852 units; break- even revenue $83,331
c) break-even production 9,259 units; break- even revenue $166,662
d) break-even production 9,259 units; break- even revenue $83,331

thank you

Answer 1

let the number of units be x
return = 9x

cost = .4(9x) + 50000

at "break-even" point, they are equal
9x = 3.6x + 50000
5.4x = 50000
x = 9259

carry on