Rebotar Inc. makes basketballs. Their fixed costs are $3,450. Variable costs are $12 per basketball. If the basketball is priced at $25 and 300 basketballs are sold, did Rebotar break even? How do you know? Show all work

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erinna erinna · Answer 1 · 2020-11-30T02:00:02+01:00

Given:

Fixed cost = $3,450

Variable cost = $12 per basketball

Selling price = $25 per basketball

Number of basketball sold = 300

To find:

Whether Rebotar did break even.

Solution:

According to the question,

Cost of 1 basketball = $12

Cost of 300 basketball = $12×300

We know that,

Total cost = Fixed cost + Variable cost

[tex]TC=3450+12(300)[/tex]

[tex]TC=3450+3600[/tex]

[tex]TC=7050[/tex]

So, the total cost is $7050.

Now,

Selling price of a basketball = $25

Selling price of 300 basketball = $25×300

Total revenue is

[tex]TR=25\times 300[/tex]

[tex]TR=7500[/tex]

So, total revenue is $7500.

At break even situation the profit is zero. In other words, the total revenue is equal to total cost.

Since, [tex]TC\neq TR[/tex], therefore, Rebotar did not break even.