Hizan is the owner of a company manufacturing shirts. His company is selling the shirts at a price of ₹200 per unit. The variable costs is ₹150 per unit. The fixed costs for the period is ₹5,00,000/-. Calculate the minimum number of units that must be sold for the company to attain break even. Show break even in terms of rupees.

Given:

Selling price = ₹200 per unit

Variable costs = ₹150 per unit.

Fixed costs for the period = ₹5,00,000

To find:

The minimum number of units that must be sold for the company to attain break even and break even in terms of rupees.

Solution:

We know that,

Total cost = Fixed cost + Variable cost

Let the number of manufacturing shirts be x, so the cost function for the shirts is

Selling price is ₹200 per unit. So, revenue function is

At break even point the company has no profit no loss. It means, revenue is equal to cost.

Divide both sides by 50.

Therefore, minimum number of units that must be sold for the company to attain break even is 10,000.

To find the break even price, substitute x=10000 in either cost function or revenue function.

Therefore, the break even in terms of rupees is ₹20,00,000.

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