1. Break even analysis To be profitable, a form must recover its costs. These costs include both its foued and its variable costs. One way that a firm evaluates at what staget would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit Consider the case of Petrox Oil Co. Petrox Oil Co. is considering a project that will have fixed costs of $10,000,000. The product will be sold for 541.50 per unit, and will incur a variable cost of $10.75 per unit Given Petrox's cost structure, it will have to sell units to break even on this project (Que). Petrox's marketing and sales director doesn't the 97,740 firm's market is big enough for the firm to break even. In fact, she believes that the im will be able to sell only about 175,000 units. Ho 259,036 also thinks that the demand for Petrox's product is relatively inelastic (so the firma increase the sales price without significantly ded volume of product sold). Assuming that the firm can sell 175,000 units, what price must it 405,620 set to break even? 325,203 genuit Petrox's marketing and sales director doesn't think that the firm's market is big enough for them to break even. In fact, she believes that the fim will be able to sell only about 175,000 units. However, she thinks that the demand for Petrox's productos reinvely inelastic (o the form can increase the sales price without significantly decreasing the volume of product sold). Assuming that the forman el 175,000 units, what pince set to break even? O $67.89 per unit O $81.47 per unit O $64.50 per unit O $74.68 per unit What affects the firm's operating break-even point? Several factors affect a firm's operating break even point. Based on the scene described in the following table, indicate whether these factors would increase, decrease, or leave unchanged a firm's break even quantituming that only the listed factor changes and all other relevant factors remain constant Increase Decrease No Change The product's sales price increases 0 The firm's fixed costs increase o The firm's tax rate increases When a large percentage of a firm's costs are fixed, the firm is said to have a degree of operating leverage O $81.47 per unit O $64.50 per unit O $74.68 per unit What affects the firm's operating break-even point? Several factors affect a firm's operating break-even point. Based on the scenarios described in the following table, ind would increase, decrease, or leave unchanged a firm's break-even quantity-assuming that only the listed factor char remain constant. Increase Decrease No Change The product's sales price increases. The firm's fixed costs increase. high The firm's tax rate increases. low degree of operating leverage. When a large percentage of a firm's costs are fixed, the firm is said to have a