Respuesta :
Answer:
$14,700
Explanation:
The computation of the level of revenue for the break even is shown below:
The monthly fixed expenditure is
= $2,500 + $500 + $750 + $200 + $250
= $4200
As we assume at x there is a break even
Now the equation would be like
10.5x = 7.5x + $4,200
x = $4,200 ÷ 3
= 1,400
So, the total revenue would be
= $10.50 × 1.400
= $14,700
Hence, the level of revenue at the break even is $14,700
The break-even point of the car wash will be $14,700.
What is break-even point?
Break-even point refers to the point of sales at which there is neither profit nor loss. It is the optimum operating point for a business. If the business operates below the break-even point, it will suffer a loss.
The formula to calculate break-even point (in units) is:
[tex]\rm Break-even\: point = \dfrac{Fixed\:cost}{Contribution\:margin}[/tex]
The contribution margin will be the difference between sale value and the variable cost. Therefore the contribution margin of car wash will be:
[tex]\rm Contribution\: margin = Selling\:price - Variable\:cost\\\\\rm Contribution\: margin = \$10.50 - \$7.50\\\\\rm Contribution\: margin = \$3.00[/tex]
The fixed cost of the car wash will be calculated as follows:
[tex]\rm Fixed\:cost = Rent + Utilities + Interest on the business loan + Insurance premium + Advertising\\\\\rm Fixed\:cost = \$2,500 + \$500 +$750 + \$200 +\$250 \\\\\rm Fixed\:cost = \$4,200[/tex]
Therefore the break-even point in units will be:
[tex]\rm Break-even\: point = \dfrac{Fixed\:cost}{Contribution\:margin}\\\\\rm Break-even\: point = \dfrac{\$4,200}{\$3}\\\\\rm Break-even\: point = 1,400 \:units[/tex]
The break-even revenue will be:
[tex]\rm Break-even\: revenue = Break-even \:units \times Selling\:price\\\\\rm Break-even\: revenue = 1,400 \times 10.50\\\\\rm Break-even\: revenue = \$14,700[/tex]
Therefore the break-even revenue is $14,700.
Learn more about break-even point here:
https://brainly.com/question/26883531
