Costs of products

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liberty

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A company's revenue for manufacturing bicycles is $150 per bicycle. The cost to manufacture each bicycle is $115, with fixed costs of $70,000 for rent on the bicycle factory. How many must be manufactured in order for costs to be equal to revenue.
 
liberty said:
A company's revenue for manufacturing bicycles is $150 per bicycle. The cost to manufacture each bicycle is $115, with fixed costs of $70,000 for rent on the bicycle factory. How many must be manufactured in order for costs to be equal to revenue.
Click to expand...
Please share your work/thoughts, regarding this assignment, with us.
 
liberty said:
A company's revenue for manufacturing bicycles is $150 per bicycle. The cost to manufacture each bicycle is $115, with fixed costs of $70,000 for rent on the bicycle factory. How many must be manufactured in order for costs to be equal to revenue.
Click to expand...
Hint: 70000 / (a-b) = 0
You'll sure need a lot of bicycles!
 
liberty said:
So if I do that then I get the answer 2000. So 2000 bikes till I equal revenue?
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\(\displaystyle 2000 * 150 = 300000. \ 2000 * 115 = 230000. \ 230000 + 70000 = 300000.\)

You always can and should check your own work.

By the way, I found denis's answer to be so short as to be cryptic (mon ami loves the cryptic).

\(\displaystyle p = \text { price per unit.}\)

\(\displaystyle v = \text { variable cost per unit.}\)

\(\displaystyle f = \text { fixed cost per period.}\)

\(\displaystyle b = \text { breakeven units sold per period.}\)

\(\displaystyle 0 = p * b - (v * b + f) \implies b(p - v) = f \implies b = \dfrac{f}{p - v}.\)
 
liberty said:
A company's revenue for manufacturing bicycles is $150 per bicycle. The cost to manufacture each bicycle is $115, with fixed costs of $70,000 for rent on the bicycle factory. How many must be manufactured in order for costs to be equal to revenue.
Click to expand...
Come on, you have to think. The bikes cost you $115 and you sell them for $150. So how much do you make on each bike? How many bikes do you need to sell (ie is how many of these profits from each bike sale do you need) to make $70,000????
 
Jomo said:
Come on, you have to think. The bikes cost you $115 and you sell them for $150. So how much do you make on each bike? How many bikes do you need to sell (ie is how many of these profits from each bike sale do you need) to make $70,000????
Click to expand...

Putting it that way makes more sense for me. Thank you I'll do the equation again. I appreciate it :)
 
Denis said:
Whoops; 70000 - (a - b) = 0 : to the corner I go...
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I have some advise for you. Why not sell your house and just live on the street corner? You spend most of your time there anyways.
 
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