Answer:
The manufacturer will have a c. Loss
Explanation:
The break-even point is the level of production at which the costs of production equal the revenues for a product and calculated by using following formula:
Break-even point in units = Fixed cost/(Selling price per unit-Variable cost per unit) = $50,000/($16-$7) = $50,000/$9 = 5.556 units (rounding)
The manufacturer produces and sells 3,000 units per month < Break-even point in units. Therefore, the manufacturer will have a loss
Answer:
c. Loss
Explanation:
To break even, the total units sold would result in the total cost being equivalent to the total sales. As such, break even is the point where profit/loss is nil. Where sales is more than cost, the company makes a profit, otherwise a loss.
Given fixed cost = $50,000
Production cost per unit = $7 (variable)
Selling price per unit = $16
Units sold = 3,000
Profit/loss = sales - cost
= 16(3000) - (7(3000) +50,000)
= 48,000 - 71,000
= $23,000
This is negative as such as a loss.
