A division of the Gibson Corporation manufactures bicycle pumps. Each pump sells for $10, and the variable cost of producing each unit is 50% of the selling price.

Question

A division of the Gibson Corporation manufactures bicycle pumps. Each pump sells for $10, and the variable cost of producing each unit is 50% of the selling price. The monthly fixed costs incurred by the division are $55,000. What is the break-even point for the division? (Round your answers to the nearest whole number.)

Answer 1

Sa

If x units are sold, income is 10x, cost is 50% of 10x = 5x so surplus is 10x - 5x = 5x.

So for break even surplus = fixed cost so 5x = 55000 so x = 11000

Mike .