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Chemical Engineering Basics - Engineering

Q1:

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.

A 250

B 500

C 1000

D 3000

ANS:B - 500

To find the break-even production per month, we need to determine the point where the total revenue equals the total cost. Let's denote:

  • F = Fixed cost per month = Rs. 5000
  • V = Variable cost per toy = Rs. 20
  • P = Sales price per toy = Rs. 30
  • Q = Quantity of toys produced and sold
The total cost (TC) is the sum of fixed costs and variable costs: TC=F+(V×Q) The total revenue (TR) is the product of the sales price per toy and the quantity of toys sold: TR=P×Q At the break-even point, total revenue equals total cost: TR=TC Substituting the given values: p×Q=F+(V×Q) 30×Q=5000+(20×Q) 30Q=5000+20Q 10 10Q=5000​/10 Q=500 Therefore, the break-even production per month will be 500 toys.