Question

The daily cost of production ‘C’ in R for ‘x unit of an assembly is C(x) = 12.5x + 6400. If each unit is sold for Rs.25/- then determine the minimum number of units that should be produced and sold to ensure no loss. If the selling price is reduced by Rs. 2.5 unit, What would be the break even point.

Answer 1

By date C(x) = 12.5x + 6400, *(x) = 25x

Break even point ⇒ C(x) = *(x)

⇒ 12.5x + 6400 = 25x ⇒ 6400 = 12.5x

⇒ x = 6400/12.5 = 512

Selling price is reduced by 2.5 unit

*(x) = (25 – 2.5) = (22.5)x

Break even point ⇒ C(x) = *(x)

12.5x + 640 = 22.5x

⇒ 6400 = 10x = x = 6400/10 = 640