Pricing and Correct Answer

Break even is when your income is equal to your expenditure (total costs: fixed + variable)

The Break Even Company hopes to break even in the first year producing their new product. The price of its product is $10 per pound; its variable cost is $5 per pound; and its fixed cost is $50 per day.

One can calculate the change in sales volume necessary for the price change to be profitable by using the following Basic Breakeven

In order to calculate the breakeven point, we use the following equation and budget data:

Although the financial goal is to create profit, we need to calculate the breakeven point to get started.

5. Determine the necessary sales in unit and dollars to break-even or attain desired profit using the break-even formula.

Determine the unit break-even point, assuming fixed costs are $60,000 per period, variable costs are $16.00 per unit, and the sales price is $25.00 per unit.

The break even values for a profit model are the values for which you earn $0 in profit. Use the equation you created in question one to solve P = 0, and find your break even values.

3. The marketing strategy of company is not so convincing because they can extend their product range with good

A price ceiling set below the equilibrium price means that the quantity supplied ____ the quantity demanded so that a ____ exists.

Decisions will be made by using the concepts of marginal costs and marginal revenue to maximize profit. A mix of pricing and non-pricing strategies will be

Assignment 5: Based on your reading in Ch 9 in Kessler, the posted readings Morality Without Religion and Universality of Moral Law, the Socrates & St. Augustine power point, pgs. 24-39 in Nye, and the Popular Culture power point.

Although, break-even is very helpful for a company to see where they are and how much improvement they can make, the company can never say that it is 100% correct as change in costs or selling price can affect this analysis greatly. Also, in the short-run break-even analysis can show an accurate figure where as in a long run, it will be a lot more difficult. So, break-even analysis is not that accurate.

As an example, if fixed costs are $100, price per unit is $10, and variable costs per unit are $6, then the break-even quantity is 25 ($100 ÷ [$10 − $6] = $100 ÷$4). When 25 units are produced and sold, each of these units will not only have covered its own marginal (variable) costs, but will have also have contributed enough in total to have covered all associated fixed costs. Beyond these 25 units, all fixed costs have been paid, and each unit contributes to profits by the excess of price over variable costs, or the contribution margin. If demand is estimated to be at least 25 units, then the company will not experience a loss. Profits will grow with each unit demanded above this 25-unit break-even level.

When price is $20.6, the quantity is 1,242,425 and profit is $101, we come near to break even point.