Question

Lets say an airplane company has fixed costs of $100 million and variable costs per unit of $2 million. planes sell for $3 million each. what us the company's break even point in terms of the number of planes that need to be told just to beak even

Answer 1

The fixed costs start the company at a net of -$100 million per year. Each plane that is produced and sold earns the company a net of +$1 million (-2 + 3). This would mean that the company would need to sell 100 airplanes in order to break even for the year.