Question

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?

Answer 1

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