Discussion: Break-Even Pricing Problem (Math Problem Sample)
Number each question you answered.
FC + (VC * Number of Units) = TC
TC/ (# of units) = Break Even Price
Discussion: Break-Even Pricing Problem
Have you been wondering how to do breakeven analysis for your business? It turns out, doing a breakeven analysis is a matter of simple math if you can accurately forecast the costs and sales your business will be working with for the coming periods.
Moreover, the purpose of doing a breakeven analysis is to determine exactly when you can expect your business to cover all expenses and start generating a profit—which is a crucial milestone in the early days of any company.
Assume you own a soft goods company that prints logo sportswear (hats, tees, sweatshirts, etc.) for college teams. The fixed costs (FC) for the two-month period preceding the NCAA Football Tournaments (Championship) are $75,000 and the variable cost (VC) for logo, hooded sweatshirts is $35.00 per sweatshirt. What would be the break-even price (pg. 295) for the production of 50,000 sweatshirts? For 80,000 sweatshirts? Show diagram of break even. Below draw a break-even analysis chart.
Price TC (50,000)
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