Review assignment 7 in chapter 14 and in 300-350 words, answer the
Calculating the break-even point requires understanding both revenue and cost structure. The basic formula for doing so involves subtracting total variable costs from total revenue and then dividing the result by contribution margins (the amount left over after subtracting variable costs from each unit sold). More specifically, this calculation can be written as Break-Even Point = Fixed Costs/(Revenue per Unit – Variable Costs per Unit). By understanding their break-even point, businesses are able to better plan their production or sales strategies with an eye towards remaining competitive while also ensuring profitability.