Question

A company is considering two options for the production of a part needed downstream in the manufacturing process. Particulars are as follows: specialized automation fixed costs = $9,000 / month variable cost / unit = $2 general automation: fixed costs = $3,000 / month variable cost / unit = $5 use scenario 2.4 to answer this question. What is the monthly break-even quantity for choosing between the two automation approaches

Answer 1

Answer:

Break even point is calculated by dividing Fixed cost by ( Price per unit- variable cost).

Explanation:

The break even point is equivalent to the all out fixed costs partitioned by the contrast between the unit cost and variable expenses. The denominator of the condition, value short factor costs, is known as the commitment edge.

After unit variable expenses are deducted from the value, anything that remains—??? the commitment edge—? is accessible to pay the organization's fixed expenses.