question archive Pens are sold in a local store for 80 cents each
Pens are sold in a local store for 80 cents each
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Pens are sold in a local store for 80 cents each. The factory has $1200 in fixed costs plus 5 cents of additional expense for each pen made. Assuming all pens manufactured can be sold, find the break even point.
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Answer:
The break even point is 1600 pens.
Cost of making n pens = $1200 + $0.05n
Revenue from selling n pens = $0.80n
At break-even point, cost = revenue.
$0.80n = $1200 + $0.05n
$0.75n = $1200
n = 1200/0.75 = 1600
You break even when you have manufactured and sold 1600 pens
