# Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company invested \$4.50 million in a plastic

just last year, a toy maker introduced a fresh doll vehicle which was a large success. The business spent \$4.50 million in a plastic shot molding device (and that can be offered for \$4 million straight away) and \$300,000 in synthetic shot molds especially for the doll (maybe not important to someone else). The price of work and products essential to make each vehicle works about \$4. This current year, a competitor has continued to develop an equivalent doll, dramatically lowering need for the doll vehicle. Today, the initial maker is determining whether or not it should carry on creation of the doll vehicle. In the event that predicted need is 100,000 vehicles, the break-even pricing is \$ per vehicle.

Break-even cost = \$7 description: The break-even pricing is the purchase price from which the the sum total share from purchase is equivalent to the fixed price of \$300,000. (x- 4)× 100,000 = 300,000 100,000X – 400,000 = 300,000 100,000X = 300,000 + 400,000 x= 700,000/100,000 X = \$7 Break-even cost = \$7

\$23 per vehicle description: Break- also evaluation: 2,000,000 ÷ 100,000 = 20 per vehicle Break-even cost per vehicle
: = cost per vehicle + work and also the price of products per vehicle = \$20 per vehicle + \$3 MC per vehicle = \$23 per vehicle appropriate expenses = 2,000,000 Note: (maybe not \$2.6 since the \$2.5 million purchased the shot mildew device and also the \$100,000 in molds tend to be sunk expenses unimportant on conversation because they have previously sustained) amount = 100,000 In the event that business can offer the vehicle for \$23, they ought to remain available. If they’re incapable of charge \$23 per vehicle they should power down.

\$29 Description: The calculation of break-even is shown below:- Complete price =\$2,500,000 + \$100,000 + 3Q Complete income = Revenue maximization TR = PQ = Revenue maximization -\$2,600,000 – 3Q And So The break-even aim complete revenue should be zero PQ – \$2,600,000 – 3Q = 0 P = (\$2,600,000 + 3Q) (Q) Presuming Q = \$100,000 P = (\$2,600,000 + \$300,000) ÷ (100,000) = \$29