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Equation Method

Moreno Corp. produces products that it sells for $7 each. Variable costs per unit are $4, and annual fixed costs are $81,000.

Use the equation method to determine the break-even point in units and dollars.

Solution Preview

Let's call Q to the quantity sold in units. The profit function would be:

Profit = 7Q - 4Q - 81,000 = 3Q - 81000
[revenue (7Q) ...