The Blair Mask company sells face masks for $6.75 each. The company has fixed costs of $374 and each mask costs $2.50 to make. What is the break even point for this company? Quantity

Answer 1

The break even point is the quantity where cost = revenue.

Let q = the quantity produced.

Cost = 374 + 2.50q

Revenue = 6.75q

Cost = Revenue means 374 + 2.50q = 6.75q

374 + 2.50q = 6.75q [subtract 2.50 q from each side to get:

374 = 4.25q [divide both sides by 4.25 to get:

88 = q

So the break even point occurs when he quantity is 88. After producing a quantity of 88 units, the Blair Mask company starts making a profit.