Calculate the break-even point (Q), for a firm whose: (a) total fixed cost (TFC) = $100,000, product price per unit of output (P) = $10.00, and average variable cost (AVC) = $7.50. (b) TFC = $600,000, P = $15,000, and AVC = $12,000.
a) Break Even Point %u2013 P x Q= F + (VxQ)
$10 * Q= $100,000 + ($7.50 * Q)
($10- $7.50) * Q= $100,000
2.5 * Q= $100,000
Q=$40,000
b) Break Even Point %u2013 P x Q= F + (VxQ)
$15,000 * Q = $600,000 + ($12,000 * Q)
($15,000 %u2013$12,000) * Q= $600,000
3,000 * Q= $600,000
Q= 200