Please answer the question with details (Step-by-Step): An oil filter manufacturing company has a capacity of...
Please answer the question with details (Step-by-Step):
An oil filter manufacturing company has a capacity of 500,000 units annually. The fixed cost of the production line is $400,000 per year with a variable cost of $6 per unit and revenues of $9 per unit. The percentage of capacity that must be utilized for the company to breakdown is closest to:
Homework Answers
Let the breakeven units be X, then
Total cost = Fixed cost + variable cost
Total cost = 400000 + 6*X
Total revenue = Price * Quantity
= 9*X
For breakeven
Total cost = Total revenue
400000 + 6*X = 9*X
3*X = 400000
X = 133333.33
Capicity utilization = 133333.33 / 500000 * 100 = 26.67%
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Please answer the question with details (Step-by-Step):
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