Finance Example – Break Even Analysis.
The break even point for a business is given by the formula:
B = F/P-V
B = units sold to breakeven point
F = fixed costs
P = price per unit
V = variable costs
Assume EducateComp knows its fixed expenses are $100,000, its variable costs are $500 per copy of AlgeComp, and they must to sell 15000 copies of AlgeComp to break even the first year. Determine the minimum price per unit they should charge?
B = F /P-V