In its first year, “Abol Buna Co” had the following experience
Sales = 25,000 units Selling price = br. 100
TVC = br. 1,500,000 TFC = br. 350,000. Find the Breakeven point in terms of quantity
for quantity x, it appears we have
VC=1500000/25000 = 6
that means we have
cost: 350000 + 6x
revenue: 100x
and breakeven occurs when cost = revenue
So set them equal and find x.
568
To find the breakeven point in terms of quantity, we need to determine the number of units that need to be sold in order to cover all the fixed and variable costs.
Breakeven point (in units) = Total Fixed Costs / (Selling price per unit - Variable cost per unit)
Given information:
Sales = 25,000 units
Selling price = br. 100
TVC (Total Variable Costs) = br. 1,500,000
TFC (Total Fixed Costs) = br. 350,000
Firstly, we need to calculate the variable cost per unit.
Variable cost per unit = TVC / Sales
Variable cost per unit = br. 1,500,000 / 25,000
Variable cost per unit = br. 60
Now we can calculate the breakeven point in terms of quantity:
Breakeven point (in units) = 350,000 / (100 - 60)
Breakeven point (in units) = 350,000 / 40
Breakeven point (in units) = 8,750 units
Therefore, the breakeven point in terms of quantity for Abol Buna Co is 8,750 units.