So far we have considered that a sale is a linear function of selling price. This means that although output increases, there is a change in selling price. Similarly, we have assumed that variable cost is a linear function of output. But this seldom happens. Often variable cost bears a non-linear relationship.

In a linear cost function, the cost equation is presented as follows:

TC = VC + FC

TC = Total Cost

VC = Variable Cost

FC = Fixed Cost

V = bX, where b is per unit variable cost is and X is no. of units.

So, TC or C = a + bX, given a is FC.

In case per unit variable cost is $ 5 and fixed cost is $ 100000, the linear cost function becomes

TC = 100000 + 5X

Given selling price of $ 10 per unit, total revenue (TR) is

TR = 10X

So, the BEP equation stands as

TR - TC

i.e., 10X = 100000 + 5X

or, 5X = 100000

X = 100000/5

X = 20000

It gives BEP 20000 units.

However , if the variable cost becomes non linear in the form of second degree polynomial, the BEP equation may appear as follows.

V = bX + c (X)(X)

Accordingly, TR – TC stands as follows

sX - ( a + bX + c(X)(X) ) = 0

i.e, - a + (s-b)X - c(X)(X) = 0

Basic Subject

Computer Science

- Programming Assignment Help
- Database Help
- Data Structure Assignment Help
- Operating Systems Assignment Help
- Computer Network Assignment Help
- UML Diagram Assignment Help
- IT Assignment Help
- Game Programming
- Computer Science Assignment Help
- Medical Science Assignment Help
- Social Science Assignment Help
- Information Systems

Engineering

- Biochemical and Biotechnology Help
- Chemical Engineering Assignment
- Statistics Assignment Help
- Civil Engineering Assignment Help
- Electrical, Electronics Help
- Mathematics, Computing Assignment Help
- Mechanical and Industrial Engg. Help
- Petroleum Engg. Assignment Help
- Biochemistry Assignment Help
- Cell Biology Assignment Help
- Arts and Architecture Help
- Silverlight Assignment Help