Correct Answer - Option 3 : 400 units
Concept:
The Break-even point is the volume of production where the organization neither earns profit nor suffer from loss because the total cost of production equals to total selling cost.
\( F + V = S\\ F + vx = sx \Rightarrow {\rm{\;}}Break\;Even\;Point\;\left( x \right) = \frac{F}{{s - v}}\)
Where F = Fixed Cost, V = Variable cost, S = Sales cost, s = Sales cost per piece, v = variable cost per piece
Calculation:
Given:
F = Rs 2000, s = Rs 10 per piece, v = Rs 5 per piece
Break even quantity is:
\( x=\frac{F}{{s - v}}=\frac{2000}{10-5}=400\) units
