A firm has the capacity to produce 1,394,240 units of a product each year. At present, it is operating at 49 percent of capacity. The firm's annual revenue is $586,664. Annual fixed costs are $149,516 and the variable costs are $.30 cents per unit. The following equations will be useful.
Profit = Revenue - Costs Revenue = Price each * quantity Costs = Fixed Cost + Variable Costs Variable Cost = Variable Cost per unit * number of units At the break even point, Profit = 0
- What is the price for each unit?
- At what volume of sales does the firm break even?