Question

Isla is a marketing manager for Marshall Manufacturing. Her boss has asked her to evaluate a new product idea. One of the things Isla wants to determine is how much of this product her firm would have to sell in order to break even. In order to compute this break-even level of sales, she will need to know the price of the good, the total fixed costs, and the variable cost of producing each unit.

True or False?

Answer 1

true

Step-by-step explanation:

the formula used to determine the break even point in units is:

• break even point in units = total fixed costs / contribution margin

where contribution margin = selling price - variable costs

The break even point refers to the output level where revenues = costs. Any output level above the break even point results in profits for the company, while any output level below the break even point results in losses.