the marketing department esti mates that if the selling price of the new product is set at birr 40 per unit sales will be 400 units per week selling price is birr 20 per unit sales will be 800 units per week the production department estimates that variable costs will be birr 7,50 per unit and fixed costs birr 10,000 per week they A develop slope
B develop sales and profit equations c find break even point?
A) Slope (S) = (400-800)/(40-20) = -20 units per birr
B) Sales equation: S = -20P + 1200 (where P is the selling price in birr)
Profit equation: P = 7.5S - 10000 (where P is the profit in birr)
C) Break even point is where the profit is zero. So, set P to zero and solve for S:
0 = 7.5S - 10000
S = 1333.33 units per week
To find the break even point in terms of revenue, plug in the value of S into the sales equation:
0 = -20P + 1200
P = 60 birr per unit
So, the break even point is 1333.33 units per week or birr 80,000 in revenue per week.