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Fundamentals of Financial Manageme...
BREAK-EVEN ANALYSIS A company's fixed operating costs are $430,000, its variable costs are $2.95 per unit and the product’s sales price is $4.50. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs?
To determine: The Company’s break-even point at which the sales volume equal its costs.
Introduction:
Break-even Point:
The break-even point is a point where there can be profit or loss. At this point, the costs incurred are equivalent to the revenue earned.
Given information:
The fixed operating costs are$430,000.
The variable costs per unit are $2.95.
The selling price of the product is $4.50.
Calculation of the break-even point:
The formula to calculate the break-even point is:
Substitute $430,000 for the fixed costs, $2
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