Q. If the fixed cost of a factory producing candles is Rs 20,000, the selling price is Rs 30 per dozen candles and the variable cost is Rs 1.5 per candle, then what is the breakeven quantity?
Answer: 20000
Notes: Breakeven quantity is the number of incremental units that the firm needs to sell to cover the cost of a marketing program or other type of investment. It is given by the formula: BEQ = FC / (P-VC) where BEQ = break-even quantity FC = total fixed cost P = average price per unit, and VC = variable cost per unit. Price per unit as per question = 30/12 = Rs. 2.5 So 20000/ (2.5-1.5) = 20000/1 = Rs. 20,000