A computer company plans to produce 30,000 computers next year they will sell for bire 700 each the fixed cost of operation care bire 5 million and total variable costs are birr birr 6 million what is the break even point
To find the break-even point, we need to know the total revenue and total cost for producing and selling 30,000 computers.
Total Revenue = Selling Price x Number of Units Sold
Total Revenue = 700 x 30,000
Total Revenue = 21,000,000 birr
Total Cost = Fixed Cost + Variable Cost
Total Cost = 5,000,000 birr + 6,000,000 birr
Total Cost = 11,000,000 birr
Now, we can calculate the break-even point using the formula:
Break-even point = Total Cost / Selling Price per unit
Break-even point = 11,000,000 / 700
Break-even point = 15,714.29
Therefore, the break-even point is 15,714 units. This means the company needs to sell at least 15,714 computers to cover its total costs. Any sales over this number will result in a profit.