# Given the price and cost data shown in the following table of each of the two firms A and B, find the breakeven point. Firm .......Sales price ..Variable operating Fixed operating cost...

** **

Given the price and cost data shown in the following table of each of the two firms A and B, find the breakeven point.

** **

**Firm **.......Sales price ..Variable operating Fixed operating cost

................per unit ..cost per unit

**A **.............16.00 6.75 24,600

**B **..............20.00 9.75 30,600

** **

**What is the operating breakeven point in units for each firm?**

** **

*print*Print*list*Cite

### 1 Answer

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.**