Dog Collar Manufacturing
math question?
Whisk-Off dog collar is produced by Pet Mart. It has total fixed costs of $12,000,000 in the manufacture of the collar. The selling price of each collar is $6.95. The variable cost per collar is $4.55. What is the break-even point in number of collars?
a. 1,726,614.155
b. 1,726,614
c. 500,000
d. 5,000,000
“fixed costs of $12,000,000; variable cost per collar is $4.55″
cost of manufacturing n collars = 1.2×10⁷ + 4.55n
revenue from selling n collars = 4.55n
at break-even point
1.2×10⁷ + 4.55 n = 6.95n
1.2×10⁷ = 2.40n
n = 0.5×10⁷
= 5,000,000 collars
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