Chapter 7S Problem 2 (Breakeven)

Breakeven analysis is a tool that tells a firm what capacity it must have to achieve profitability. It is the point, in dollars and units, at which costs equals revenue. To achieve profitability firms must operate above this point. Page 307 - 308 provides formulas for calculating BEP in dollars or units.

Given the following data, calculate the BEP in units, BEP in dollars, and profit at 100,000 units;

P=$8/unit

V=$4/unit

F= $50,000