Answer
See below:
Work Step by Step
(a)
As, fixed cost is\[\$360,000\], and it will be cost\[\$850\]to produce each computer.
It means the fixed cost is a constant parameter, but \[\$850\]is a variable parameter, because it is a cost to produce per computer.
Therefore, the total cost will be the sum of variable cost and fixed cost.
\[\begin{align}
& \text{Total cost}\left( C \right)=\text{ Fixed cost}+\text{Variable cost} \\
& \text{Total cost}\left( C \right)=360,000+850x \\
\end{align}\]
where, x denotes the number of computers.
(b)
Since, the computer will be sold for the cost \[\$1150\]to produce each computer.
It means, \[\$1150\]is a variable parameter, because it is the cost to sell per computer.
Therefore, total selling cost or total revenue to sell the x computer:
\[\begin{align}
& \text{Total Revenue}\left( R \right)=\text{Variable selling cost} \\
& \text{Total Revenue}\left( R \right)=1150x \\
\end{align}\]
where, x denotes the number of computers.
(c)
Break-even is the amount of product by which, the company will be in zero profit or zero loss condition.
It means, the break-even point is the point at which total selling cost will be equal to total production cost.
\[\begin{align}
& \text{Total selling cost}\left( R \right)=\text{ Total production cost}\left( C \right) \\
& \text{1150}x=360,000+850x \\
& 300x=360,000 \\
& x=1200 \\
&
\end{align}\]
Now,
\[\begin{align}
& \text{Total selling cost}\left( R \right)=1150x \\
& =1150\times 1200 \\
& =1,380,000
\end{align}\]
Hence, the break-even point is\[\left( 1200,\text{ }1,380,000 \right)\].
