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Amex Ltd sells its product for $25 each. This year, Amex’s fixed cost totals $100679. The variable cost per product is $11.What is the break-even point in number of products?

Question

Amex Ltd sells its product for 25each.Thisyear,Amexsfixedcosttotals25 each. This year, Amex’s fixed cost totals 100679. The variable cost per product is $11.What is the break-even point in number of products?

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Solution

The break-even point is the point at which total revenue equals total costs, resulting in neither profit nor loss.

To calculate the break-even point in units, you can use the formula:

Break-even point in units = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Given in the problem:

Total Fixed Costs (TFC) = 100679SellingPriceperUnit(SP)=100679 Selling Price per Unit (SP) = 25 Variable Cost per Unit (VC) = $11

Substitute these values into the formula:

Break-even point in units = 100679/(100679 / (25 - $11)

Solve the equation:

Break-even point in units = 100679/100679 / 14

Break-even point in units = 7191.36

Since you can't sell a fraction of a product, you would need to sell approximately 7192 products to break even.

This problem has been solved

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