Marty Quinn has business packing software in Laredo, TX . His annual fixed cost

Question

Marty Quinn has business packing software in Laredo, TX . His annual fixed cost is $10,322.09, direct labor is $3.32 per package, and material is $4.20 per package. The selling price will be $12.9 per package. i) What is the break-even point in units?

Explanation / Answer

Let Q be total number of packages. total cost = fixed cost + variablecost*Q => TC = FC + VC*Q => TC = 10,322.09$ + (3.32+4.2)Q => TC = 10322.09+7.52Q But selling price is 12.9$ per package. Hence total SP = 12.9*Q = 12.9Q For break even point, SP = TC 12.9Q = 10322.09+7.52Q => Q = 1919 packages. Thus break even point is 1919 packages.

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