Answered

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The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations. Location Annual Fixed Cost ($) Unit Variable Cost ($) A 200,000 50 B 300,000 45 C 400,000 25 D 600,000 20 a. The break-even point between location A and C is . b. The break-even point between location C and D is .

Sagot :

The break-even point between location A and C is 8000 units while the break-even point between location C and D is 40000 units.

Let the breakeven point be represented by x.

Based on the information given, the equation to solve the question will be:

200000 + 50(x) = 400000 + (25 × x)

200000 + 50x = 400000 + 25x

50x - 25x = 400000 - 200000

25x = 200000

x = 200000 / 25

x = 8000

For the second question, the equation to solve the question will be:

400000 + 25x = 600000 + 20x

25x - 20x = 600000 - 400000

5x = 200000

x = 200000 / 5

x = 40000

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