Price is R19k per unit (fixed). firm expected to function @ 1 000 units to be manufactured. total fixed cost is R10m; total variable cost is R14m. Calc. operating breakeven point in rand terms
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First step - work out variable cost per unit manufactured -
14 million divided by 1000 = 14 k cost per unit
.1000 units - fixed cost / 1000 units = 10 k per unit
to break even R24 k per unit based on 1000 units being made
To break even based on R19K as sale price
(R14K * x +R10K) = 19k * x
14Kx+R10k=19Kx
R10k=R5Kx
x=R10k/5K
x=2000 units required if sale price is R19k to break even