Question

Break-Even Analysis A multimedia company produces DVDs. It estimates their cost function to be: Clx) - 12.6 x + 48,094 The DVD is sold to retail outlets and the revenue function is: R60 - 16.52% Both C1x) and R6) are in dollars and x-number of DVDs manufactured and sold. How many DVDs must be manufactured and sold in order for the company to break even? (Round to the nearest whole number).

Answer 1

Break even sale is a sales amount which exactly covers the underlying fixed expenses of a business, plus all variable costs associated with the sale. That means there will be no loss or profit at that level of sale.

Cost function is C(x)= 12.6x + 48094

Here Fixed Cost is $48094

Variable Cost per Unit is $12.6

Revenue function is R(x)= 16.52x

So,cselling price per DVD is $16.52

Break even sale unit:- 12.6x + 48094 = 16.52x

:- 16.52x - 12.6x= 48094

:- 3.92x = 48094

:- x = 48094 / 3.92

x = 12268.87 DVDs (approximately 12268 DVDs)

It is clear that the multimedia company must manufacture and sold 12268 DVDs to achieve break even