For a small scale toy factory, the fixed cost per month is Rs. 5000/-. The variable cost per toy is Rs. 20 and sales price is Rs. 30 per toy. The break even production per month will be _________________ toys ?
Correct answer: B. 500
- A. 250
- B. 500
- C. 1000
- D. 3000
Explanation
At break-even, fixed cost equals contribution from sales: production = 5000/(30 − 20) = 500 toys per month. The contribution per toy is therefore Rs. 10.
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