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The Astronomical Telescope shop plans to introduce a new model based on the following information: Rent and utilities per period are $ {fixed}; variable cost per unit is $ 217; selling price per unit is $ 305; determine the break-even point in units if rent and utilities are increased to $ 5420.

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onyebuchinnaji

The break-even point of the Astronomical Telescope model is 61.6 units.

The given parameters;

  • fixed cost for rent and utilities = $ 5420
  • variable cost per unit = $217
  • selling price per unit = $305

The break-even point in units is determined from the point at which the total revenue is equal to expenditure.

Revenue = expenditure

[tex]305 u = 5420 + 217u\\\\305u - 217u = 5420\\\\88u = 5420\\\\u = \frac{5420}{88} \\\\u = 61.6 \ units[/tex]

Thus, the break-even point of the Astronomical Telescope model is 61.6 units.

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