Chapter 14, Problem 1P

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

Chapter
Section

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

# 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? Summary Introduction 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. Explanation 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:

Break-evenāpoint=Fixedācosts(SellingāpriceāperāunitāVariableācostsāperāunit)

Substitute $430,000 for the fixed costs,$2

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