Marketing Managers Often Use Break-Even Analysis to Analyze the Relationship

question 155

Essay

Marketing managers often use break-even analysis to analyze the relationship between total revenue and total cost to determine profitability at various levels of output. What is the break-even formula? Use the formula to calculate how many compact disc players a dealer must sell if her fixed costs are $6,000, unit variable costs are $140, and the selling price is $200.

---

Definitions:

Variable Expenses

Expenditures that adjust in relation to the business's operation level or production quantity.

Shipping Costs

The expenses associated with the delivery of goods from a seller to the buyer, which can include packaging, postage, and handling fees.

Residual Income

The income that remains after deducting all required costs of capital from the operating income.

Investment Opportunity

Refers to a financial investment or asset that has the potential to generate a profitable return.