Computer Company's Break Even Point: 30000 Computers

In summary, The break even point is the point at which the revenue from selling 30000 computers at \$700 each equals the total costs of \$11,000,000 (\$5,000,000 fixed costs + \$6,000,000 variable costs). At this point, the revenue and costs will be equal, resulting in \$0 profit. To find the break even point, the revenue must be equal to the total costs, so the number of computers sold must be 30000.
  • #1
Suraphel
4
0
Dear All,
Please help me.
A computer company plans to produce 30000 computer next year. They will sell for \$700 each. The fixed cost of operation care \$5000000 total variable cost are \$6000000. What is the break even point?
 
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  • #2
at the break even point, revenue - (fixed cost + variable cost) = 0

You are given both fixed and total variable costs ... revenue is number of computers sold time \$700
 
  • #3
skeeter said:
at the break even point, revenue - (fixed cost + variable cost) = 0

You are given both fixed and total variable costs ... revenue is number of computers sold time \$700

A little bit confused please put the final answer.
Thanks in advance.
 
  • #4
Suraphel said:
A little bit confused please put the final answer.
Thanks in advance.
What are you confused about? Please let us know.. It'll give us a better idea about how to respond. We are not going to simply post the answer though you have essentially been give the solution already.

-Dan
 

FAQ: Computer Company's Break Even Point: 30000 Computers

What is a break even point?

A break even point is the point at which a company's total revenue equals its total expenses, resulting in a net profit of zero. It is the minimum amount of sales a company needs to make in order to cover its costs.

How is the break even point calculated?

The break even point can be calculated by dividing the fixed costs by the difference between the unit price and the variable cost per unit. In this case, the fixed costs would be the total expenses associated with producing and selling 30,000 computers, and the variable cost per unit would be the cost of producing one computer.

Why is the break even point important for a computer company?

The break even point is important for a computer company because it helps determine the minimum number of computers that need to be sold in order to cover all expenses and start making a profit. It also provides a benchmark for setting prices and making decisions about production and sales strategies.

What factors can affect a computer company's break even point?

The break even point can be affected by various factors such as changes in production costs, changes in sales volume, changes in the selling price, and changes in fixed costs. Market conditions and competition can also impact the break even point.

Can a computer company's break even point change over time?

Yes, a computer company's break even point can change over time due to various factors such as changes in market conditions, changes in production costs, and changes in sales volume. It is important for companies to regularly review and adjust their break even point in order to stay profitable and competitive.

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