One Product Company Breaks Even

What price will allow Acme to break even when they have sold 15,000 units?

To break even after selling 15,000 units, Acme needs to set a price of $30 per unit.

In the scenario where Acme is a one-product company with total fixed costs of $300,000 and sells their product for $25, we are given that it costs Acme $1,000 to produce 100 units of their product. To determine the price that will allow Acme to break even when they have sold 15,000 units, we need to consider both the fixed costs and variable costs.

Acme's fixed costs remain constant at $300,000, while the variable costs per unit can be calculated by dividing the total production cost ($1,000) by the number of units produced (100 units), resulting in a variable cost of $10 per unit. By adding the fixed costs and the variable costs per unit multiplied by the number of units sold, we can find the total costs and calculate the break-even price.

The total costs can be calculated as $300,000 (fixed costs) plus ($10 per unit x 15,000 units), which equals $450,000. Dividing the total costs by the number of units sold, $450,000 ÷ 15,000 units = $30 per unit. Therefore, for Acme to break even after selling 15,000 units, they need to set a price of $30 per unit.

By setting the price at $30 per unit, Acme will cover both their fixed and variable costs, breaking even in the process. This scenario demonstrates the importance of pricing strategies in achieving profitability and sustainability for a one-product company like Acme.