Once you have determined the break-even point for your product, you can use it to examine...

Once you have determined the break-even point for your product, you can use it to examine the effects of increasing or decreasing the role of fixed costs in your operating structure. The extent to which a business uses fixed costs (compared with variable costs) in its operations is referred to as operating leverage. The greater the use of operating leverage (fixed costs, often associated with fixed assets), the larger the increase in profit as sales rise and the larger the increase in loss as sales fall. The higher the break-even quantity for your product, the greater your business risk.

Let x be the number of units and p be the price of the item a company produces.

For this company, revenue is R ( x ) = p x and cost is C ( x ) = 100 x + 10000. Use these functions to support your conclusions to the following:

Suppose the company has a monopoly for this product so that it can set the price as it chooses. What are the benefits and the danger to the company of pricing its product at $1,100 per unit?

If the company has a monopoly for this product so that it can set the price, what are the benefits and the danger to the company of pricing its product at $101 per unit?

Expert Solution

orchestra answered 1 year ago

Break-Even Point

S.S Corporation had sales of Rs. 4,500,000. The fixed expense was Rs. 1,200,000 and variable expense totaled Rs. 1,800,000. You are required to calculate Break-Even Point for S.S Corporation.

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Compute the break even point for a multi product company and explain the effects of shifts...

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a. Before you can compute the firm's break-even point in sales dollars, you need to compute...

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a. How are contribution margin and break even related? b. What happens to break even point...

a. How are contribution margin and break even related? b. What happens to break even point if variable cost per unit changes, if fixed cost changes? c. Explain the degree of operating leverage and how it is related to a companies profit risk.

Q2. (a) WHAT IS BREAK - EVEN POINT? (b) EXPLAIN THE IMPORTANT MANAGERIAL USES OF BREAK-EVEN...

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What is the break-even point in unit sales?

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Give an example from your own experience where you used a break-even point analysis.

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When your Break-Even Point is 500,000 and your market survey findings indicate that in the region...

When your Break-Even Point is 500,000 and your market survey findings indicate that in the region you choose to move or relocate your company, you can only sell up to 250,000 units per year over the next three years, then what business decision will you create with this information? Which alternative would you prefer if you were the business owner or manager? Why is that so?

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