The instructor will provide a case to assess students knowledge of Break-Even and Shutdown Points analysis. Students will be asked to analyze the relationship among sales, cost, and profit by calculating the Break-Even and Shutdown Points. The primary objective of conducting the above calculations is to make a data-driven decision to determine whether the company of interest should continue or end its business operations. Students should provide an in-depth analysis to shed light upon their decision-making process and justify their final course of action (i.e., continuing vs. terminating operations). Adherence to APA formatting is required and the case response will be 5-7 pages (excluding cover page and reference page) and should include a minimum of three (3) professional references.

Final Case Study The break-even point can be defined as the production and sales levels of a given product at which the revenue generated from the sales is perfectly equal to the production cost. At this point, the company does not make any profit or loss; that is, it breaks even. The shut-down point refers to the minimum price where companies prefer shutting down their operation instead of continuing to operate. In other words, it is the minimum price and quantity for keeping operations open. As seen previously, the break-even point is the point where the marginal cost (MC) equals the average total cost (ATC). The shut-down point of production, on the other hand, is the price at which the marginal cost does not even cover the average variable cost (ATC). At this point, the company is better off stopping its production than keeping to produce at a loss. Suppose the hospital operates in a perfectly competitive market. The market price of this product is $40. Assume that a manufacturing company Total Cost (TC) function is TC=20Q6Q2+Q3 What is the minimum market price for which you will choose to produce