Question

Jane corporation produces model toy cars. each sells for $32.43. its variable cost per unit is $17.63. assuming it has a fixed cost of $365,560. what is the breakeven point for jane corporation?

Answer 1

Jane Corporation's breakeven point is when they sell 24,699 units of their model toy cars, which allows them to cover their fixed cost of $365,560.

Step-by-step explanation:

To calculate the breakeven point for Jane Corporation, we can use the formula Breakeven Point (units) = Fixed Costs / (Price per Unit - Variable Cost per Unit). In this case, the fixed costs are $365,560, the price per unit is $32.43, and the variable cost per unit is $17.63.

The calculation would be:
Breakeven Point (units) = $365,560 / ($32.43 - $17.63) = $365,560 / $14.80 = 24,699 units

Therefore, Jane Corporation must sell 24,699 units of their toy car model to break even. This point is where total revenue equals total costs, and it is crucial for a business to know this point to ensure they cover all their costs and start making a profit beyond this level.