Question

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. 

Answer 1

 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 `