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The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. How many cords of wood would he have to split with this machine to break even

Respuesta :

Cricetus

Answer:

The correct answer is "2000 units".

Explanation:

Given:

Fixed cost,

F = $50,000

Variable cost,

VC = $100 per unit

Price,

P = $125 per unit

Let the units to be sold be "x".

Throughout the case of breakeven,

⇒ [tex]Total \ revenue=Total \ cost[/tex]

⇒                [tex]125x=50000+100x[/tex]

On subtracting "100x" from both sides,

⇒    [tex]125x-100x=50000+100x-125x[/tex]

⇒                  [tex]25x=50000[/tex]

⇒                      [tex]x=\frac{50000}{25}[/tex]

⇒                         [tex]=2000 \ units[/tex]

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