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25 May, 01:39

The fixed cost of Brendon Willows, a baseball bat manufacturing company, is $500,000 per year. The cost of wood and labor to manufacture one bat is $5. If the customers pay $25 to buy one bat, how many bats does Brendon Willows need to sell to break even? A. 20,000B. 25,000C. 100,000D. 150,000

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  1. 25 May, 04:18
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    option (B) 25,000

    Explanation:

    Data provided in the question:

    Fixed cost = $500,000 per year

    Cost of wood and labor to manufacture one bat = $5

    Selling price of the bat = $25

    Now,

    At breakeven, total cost equals to the total revenue

    let the breakeven quantity be 'x'

    thus,

    $500,000 + $5x = $25x

    or

    $25x - $5x = $500,000

    or

    $20x = $500,000

    or

    x = 25,000

    Hence,

    the correct answer is option (B) 25,000
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