A company must decide if it will make or buy an item it needs. The company can make the item for $10 per unit, but must invest $15,000 irn tooling to achieve that capability. Alex Rogo has quoted a total price of $12 per unit to supply the quantity required (assume their fixed costs are included in the quoted price). Refer to the instruction above. What is the break-even quantity in this situation? 7,500 units 6,500 units 7,250 units

7500 units.

Explanation:

Given the following ;

Fixed cost = $15,000

Selling price per unit = $12

Variable per unit cost = $10

Break even point (unit) is calculated by;

Point whereby the revenue generated from a certain number of units sold will result in a net profit of zero. That is no loss due to investment cost and no profit made.

Fixed cost ÷ Contribution margin

Contribution margin = selling price - variable cost

Here,

Contribution margin = $12- $10 =$12

Break even point (in unit) = $15,000 ÷ $2

Break even point (in unit) = 7500

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

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