A manufacturing process at Simplicity XP has a fixed cost of $40,000 per month. A total of 100 units can be produced in 1 day at a cost of $3000 for materials and labor for the day. If the compa­ny’s MARR is 12% per year, compounded monthly, how many units must be sold each month at $50 per unit for the company to just break even?

What will be an ideal response?


For breakeven, 0 = revenue – cost
0 = 50x - [40,000 + (3000/100)x]
20x = 40,000
x = 2000 units per year

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