Firm XYZ has the following Paice and COST data: Total Fixed Cost = $500,000 (2opto

Economics Dec 05, 2020

Firm XYZ has the following Paice and COST data: Total Fixed Cost = $500,000 (2opto.) Average Fzied Costa #45 Average Variable lest #100 Price of Prodrect # 350 (a) Gleulate Break-even Output hevel. (b) Calculate Total Revenue at BEP.

Expert Solution

5 a) Let the breakeven output level be x units.

At breakeven output, the total cost will be equal to the total revenue.

500000 + 100*x = 350*x

= 250*x = 500000

= x = 2000 units.

So, the breakeven output level is 2000 units.

b) The total revenue at breakeven point =

= 2000 * $350

= $700,000

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