Question

Calculate the break-even point for a new toy that costs $12 to make and market and that will be sold for $15. The total quantity that will be sold at that price is 200,000.

Submit your answer to the dropbox titled Factors Involved in Price Planning

make it sound 8th grade and make it short

Answer 1

To find the break-even point for the new toy, we need to know the fixed and variable costs. The toy costs $12 to make and sell (this is the variable cost), and it sells for $15.

1. **Selling Price:** $15
2. **Cost to Make and Market (Variable Cost):** $12
3. **Profit per Toy:** $15 - $12 = $3

To break even, we need to cover the total costs. If we assume there are some fixed costs (like marketing or rent), we need to know those to calculate the exact break-even point in terms of quantity. But if we just talk about how many toys it takes to cover the costs of making and selling them, we can look at the profit.

If our goal is to sell 200,000 toys, we can calculate the total profit if we sell all of them:

Total Profit = Profit per Toy x Number of Toys Sold
Total Profit = $3 x 200,000 = $600,000

Now, to break even, we need to make sure our total sales equal our costs. If you have specific fixed costs, you can use that number to determine how many toys you need to sell to reach the break-even point.

In short, you need to calculate how many toys you need to sell to cover all costs, but from selling 200,000 toys, you'll make a nice profit of $600,000!