A. If a firm has: 1) fixed cost of $10,000, 2) normal return of $20,000, 3) selling price of $1,000 per unit, and 4) variable cost of $600 per unit; what is the breakeven point in units? B. Recalculate the above breakeven pit in units assuming a 20 % reduction in the selling price per unit.

BEP in units is 25 units, and B) 50 units.

Explanation:

The formula for Break even point is Fixed costs / Contribution per unit or total contribution.

In the following scenario the contribution per unit is $1000 - $600 = $400.

The fixed costs are $10000. Thus the Break even point in units will be 10000/400 = 25 units.

If the selling price drops by 20%, the contribution will now be $200. (200 dollars less due to the 20% drop).

The break even point will now be;

10000/200 = 50 units

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1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

                                          hope it