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Break Even Point Calculation

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(Break-even point) You are a hard-working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units. Using this information, find the break-even point in units of output for the firm.

Return on operating assets
= 25%

Operating asset turnover
= 5 times

Operating assets
= $20 million

Degree of operating leverage
= 4 times

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Solution Summary

The solution computes breakeven point with given data consisting only - Return on operating assets, Operating asset turnover, Operating assets and Degree of operating leverage.

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We have following information...

Return on operating assets = 25%
Operating asset turnover = 5 times
Operating assets = $20 million
Degree of operating leverage = 4 times

Operating Profit Margin (OPM)

OPM = Operating Income / Sales

(a) Formula: Return on ...

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