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# Break-Even Analysis

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The break-even point will be used to determine the quantity that the firm will produce and cover all the cost.

Break-even point in unit=Fixed cost/ (Selling price-Variable cost)

Also, the break-point is attained when the total cost is equal to the total revenue

Assumption

The total revenue for the industry is \$600,000

=\$200,000+q(1.2)=\$600,000

=\$400,000=1.2q

Producing 333,333 units will enable the firm to achieve its competitive advantage.

Loma Linda

Fixes cost=\$180,000

Total variable cost=\$0.25+0.75+0.75=\$1.75

=\$180,000+q(1.75)=\$600,000

=\$420,000=1.75q

Q=280,000 units

Upland

Fixed cost=\$170,000

Variable cost=\$1+\$1+\$1=\$3

=\$170,000+3(q)=\$600,000

=\$430,000/3q

=143,333 units

September 25, 2023
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