From the information provided, we can see that the fixed operating cost for Firm A is 24600 and that for Firm B is 30600. The variable operating cost per unit is 6.75 for firm A and 9.75 for firm B. Firm A is able to sell each unit at 16 and Firm B at 20.

Let the number of units to be manufactured by firm A for breakeven be equal to A.

So we have 16*A = A*6.75 + 24600

=> A( 16 - 6.75) = 24600

=> A* 9.25 = 24600

=> A = 24600/ 9.25

=> A = 2660

**Therefore Firm A should manufacture 2660 units for break even.**

Similarly for Firm B, let the units to be manufactured for breakeven be equal to B.

20*B = 9.75*B + 30600

=> B(20 - 9.75) = 30600

=> B*10.25 = 30600

=> B = 30600/10.25

=> B = 2986

**Therefore Firm B should manufacture 2986 units for break even.**

Posted on

## We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

- 30,000+ book summaries
- 20% study tools discount
- Ad-free content
- PDF downloads
- 300,000+ answers
- 5-star customer support

Already a member? Log in here.

Are you a teacher? Sign up now