SOLUTION: The break-even point for a business is given by the formula: B=F/P-V in which B= units sold to break-even point, F= fixed costs, P= price per unit, v= variable costs Network sys

Algebra ->  Algebra  -> Finance -> SOLUTION: The break-even point for a business is given by the formula: B=F/P-V in which B= units sold to break-even point, F= fixed costs, P= price per unit, v= variable costs Network sys      Log On

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Question 155258: The break-even point for a business is given by the formula: B=F/P-V in which
B= units sold to break-even point, F= fixed costs, P= price per unit, v= variable costs
Network systems is introducing a new network card. Suppose network Systems knows its fixed costs are $600,000, its variable costs are $500 per card, and it must sell 15,000 cards to break even the first year. What is the minimum price per unit it should charge?
Answer by jojo14344(1512) About Me  (Show Source):
You can put this solution on YOUR website!
B=%28F%2FP%29-V --------> working eqn
We know to Break Even, the total revenue should be zero(0)---> NO GAIN, NO LOST, IT'S BREAK EVEN, right?
We isolate the working eqn,F=600000, V=500, P=unknown
These 3 values should equal to zero and isolating them:
%28F%2FP%29=V
600000%2FP=500
500P=600000
cross%28500%29P%2Fcross%28500%29=cross%28600000%291200%2Fcross%28500%29
P=1200 -------------> Total Price of the units
To get MINIMUM PRICE PER UNIT:
P%2Funits=1200%2F15000cards=$0.08/card -----------> Final Answer
To check, go back working eqn:
B=%28600000%2F1200%29-500
B=500-500
B=0 --------------> Break even, NO GAIN, NO LOST!
Thank you,
Jojo