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
Category:

Business Economics

Subcategory:

Entrepreneurship

Subject area:

Business Analysis

Number of pages

1

Number of words

84

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38

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