Sum

A company produces a commodity with Rs. 24,000 as fixed cost. The variable cost estimated to be 25% of the total revenue received on selling the products, is at the rate of Rs. 8 per unit. Find the break-even point.

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#### Solution

If break even point

Revenues = Variable cost + Fixed cost Let the total revenue be ‘x’

`therefore x = 25% of x+24000`

`therefore x = x/4+ 24000`

`(3x)/4 = 24000 therefore x = 8000xx4 = 32000`

`therefore x = x/4+24000`

`therefore (3x)/4=24000 therefore x=8000xx4 =32000`

`therefore total revenue = Rs. 32000`

∴ break even point (in units) = `32000/8 = 4000 units `

Concept: Application of Calculus in Commerce and Economics in the Profit Function and Breakeven Point

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