A manufacturing company leases a building for $90000 per year for its manufacturing facilities. In addition,...
A manufacturing company leases a building for $90000 per year for its manufacturing facilities. In addition, the machinery in this building is being paid for in installments of $22000 per year. Each unit of the product produced costs $14 in labor and $9 in materials. The product can be sold for $45
How many units per year must be sold for the company to breakeven? Choose the closest ans.
A. 8146
B. 6109
C. 7127
D. 3055
E. 5091
Homework Answers
Let the output be Q
Fixed cost = lease + instalment on machines = 90000 + 22000 = 112000
Selling price per unit = 45
Cost price per unit = material cost + labor cost=14+9 = 23
Now Total cost = 23*Q + 112000
Total revenue = 45*Q
At breakeven
Total revenue = total cost
45Q=23Q+112000
22Q =112000
Q=5090.90 = 5091
Answer is option E
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