I'm pretty sure I have the answer, but I'm just checking to make sure since this is an important assignment.
It costs $3,000 to buy a pencil machine and $0.10 to produce each pencil. If each pencil sells for $0.70 , then what is the break even point?
I'm almost 100% sure that it's 5,000 pencils, but my only doubt is that means they would have to sell every single pencil that they produce. When finding the break even point, is the assumption that they sell everything produced by default?
It costs $3,000 to buy a pencil machine and $0.10 to produce each pencil. If each pencil sells for $0.70 , then what is the break even point?
I'm almost 100% sure that it's 5,000 pencils, but my only doubt is that means they would have to sell every single pencil that they produce. When finding the break even point, is the assumption that they sell everything produced by default?
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You have the right answer.When you are trying to find the break-even point, you do not have to figure if they all sell.This decision is up to the owner or the top management to consider. Your job is just to figure out how many pencils they need to sell to break-even
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You've got the right answer. Unless they tell you "so and so amount of pencils don't sell" then you just assume all sell.