---
title: "Break-even volume of a cable company"
subject: "Engineering Economics"
chapter: 1
key: "semester_6/engineering_economics:breakeven-cable-manufacturing-5000"
source: https://www.bctengineer.com/q/semester_6/engineering_economics/breakeven-cable-manufacturing-5000
site: BCT Engineering
---

# Break-even volume of a cable company

Engineering Economics · Chapter 1: Introduction

- Asked in: 2069 Bhadra, 4 marks
- Video: ["Break - Even Point" Formulas & Problems](https://www.youtube.com/watch?v=Idum--hF73s) — Devika's Commerce & Management Academy
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_6/engineering_economics/breakeven-cable-manufacturing-5000
- Whole chapter: https://www.bctengineer.com/md/semester_6/engineering_economics/chapter-1

## Question

Calculate breakeven volume of a cable manufacturing company from the following data: Total cost = 1,200,000; Variable cost = Rs. 400,000; Income from sales = 15,00,000 at production of 5000 units.

## Short answer

Fixed cost = Rs 8,00,000, selling price Rs 300/unit, variable cost Rs 80/unit, contribution Rs 220/unit. Break-even volume = 800,000/220 = 3,636 units (≈3,637 units).

## Answer

#### Data (at 5,000 units)
- Total cost = Rs 1,200,000
- Variable cost (total) = Rs 400,000
- Sales income = Rs 1,500,000

#### Step 1: Fixed cost and unit values
- Fixed cost FC = 1,200,000 − 400,000 = **Rs 800,000**
- Variable cost per unit v = 400,000 / 5,000 = **Rs 80**
- Selling price per unit p = 1,500,000 / 5,000 = **Rs 300**
- Contribution per unit = 300 − 80 = Rs 220

#### Step 2: Break-even volume
Q* = FC / (p − v) = 800,000 / 220 = **3,636.4, about 3,637 units**

Break-even sales = 3,636.4 × 300 = Rs 1,090,909

Check by the ratio method: contribution ratio = 220/300 = 0.7333; FC / 0.7333 = Rs 1,090,909. 

**Answer: Break-even volume = about 3,637 units (sales Rs 1.09 million).** The planned output of 5,000 units is 1,363 units (27%) above break-even, so the company makes a profit of 5,000×220 − 800,000 = Rs 300,000.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Fixed cost is found as:
   A. Total cost / units
   B. Sales - total cost = Rs 300,000
   C. Total cost - total variable cost = Rs 800,000
   D. Variable cost / units
   Answer: C. 1,200,000 - 400,000 = 800,000. (Key point: Fixed cost)

2. Selling price and variable cost per unit are:
   A. Rs 240 and Rs 80
   B. Rs 300 and Rs 160
   C. Rs 80 and Rs 300
   D. Rs 300 and Rs 80
   Answer: D. p = 1,500,000/5,000, v = 400,000/5,000. (Key point: Unit values)

3. Break-even volume is:
   A. 800,000/220 = about 3,637 units
   B. 800,000/300 = 2,667 units
   C. 800,000/80 = 10,000 units
   D. 1,200,000/220 = 5,455 units
   Answer: A. Contribution per unit is 220. (Key point: Break-even volume)

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