Question

Belle Corp. has a selling price of $50 per unit, variable costs of $40 per unit, and fixed costs of $100,000. What sales revenue is needed to break-even?

I need help working out this problem. I get confused on the process.

Answer 1

Answer:

$500 000

Step-by-step explanation:

 Let r = revenue

and c = costs

and n = number of units. Then

r = 50n and

c = 40n + 100 000

At the break-even point,

r = c

50n = 40n + 100 000

10n = 100 000

    n = 10 000

The break-even point is reached at 10 000 units. At that point,

r = 50n =50 × 10 000 = 500 000

A sales revenue of $500 000 is needed to break even.