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Break-Even Analysis

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NoNox manufactures gasoline additives. The variable material cost is $0.72 per pint, and the variable labor cost is $1.90 per pint. Suppose NoNox incurred a fixed cost of $510,000 during the year. What if the selling price is $4.25 per pint?

a/ what is the volume of gasoline additives (in pints) that NoNox has to produce to break even annually?

b/ If NoNox plans to earn a profit of $250,000, what is the volume of gasoline additive that it should manufacture?

Quantity break-even = fixed รท sales - variable cost(s)

Thank you for your help.

Solution Preview

Quantity to Break Even = Fixed Cost / (Sale Price - Variable Cost)
= ...

Solution Summary

The solution explains the concepts of Break Even analysis very well using the example in the question. All the steps are clearly explained and outlined. The answer is very easy to understand and can be followed along with anyone who has a basic understanding of the subject. Overall, an excellent response to the question.