Mini-Case 12-4: Calculating the Break-Even Point

question 92

Essay

Mini-Case 12-4: Calculating the Break-even Point
A small manufacturer plans to sell tents for $120 each. The variable cost for each tent is $90. Fixed costs for the process are estimated to be $36,000. How many tents must the company sell to break-even?
-Suppose that the manufacturer desires a profit of $9,000 on this product. How many units must be sold?

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Definitions:

Negotiability

The characteristic of a financial instrument that allows it to be transferred or assigned from one party to another.

Drawee

The individual or entity upon whom a check, draft, or bill of exchange is drawn and who is responsible for paying it.

First Bank

Historically, refers to the initial bank established in a region or country, or the earliest phase of banking service provision.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date.