Chapter 6, Problem 6Q

To determine

Break-Even Point:

It is the point of sales at which entity neither earns a profit nor suffers a loss. It can also be said that the point of sales at which sales value of the entity recovers the entire cost of fixed and variable nature is called break-even point.

To Describe: How the break-even point will be affected, if the management chooses to reduce its selling price to match with a competitor.