Question #288392

A fabrication company engaged in production of a motor part has a production capacity of 700, 000


pieces per year. But, it is just operating at 62% of its full capacity due to unavailability to finance the


importation of their materials. The company has an annual income of P 430, 000.00, annual fixed cost


are P 190, 000.00 and variable costs are P 0.348 per unit. How many productions of parts must be


produced for break-even point?

1
Expert's answer
2022-01-18T13:02:08-0500

The price is:

P=(TP+TC)/Q=(430,000+190,000+0.348×0.62×700,000)/(0.62×700,000)=1.777.P = (TP + TC)/Q = (430,000 + 190,000 + 0.348×0.62×700,000)/(0.62×700,000) = 1.777.

The break-even point is:

Q=190,000/(1.777×(10.348))=163,990.4Q = 190,000/(1.777×(1 - 0.348)) = 163,990.4 units.


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