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Computing the Break-Even Point

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The problem follows: Please provide a step-by-step analysis for my own understanding.

PROBLEM 15-12A
BREAKEVEN POINT

DATA
Output level 10 million units
Return on oper. assets 25%
Oper. asset turnover 5 times
Oper. assets $20 million
Oper. leverage 4 times

Step 1
Operating profit margin =
Step 2
Sales level =
Step 3
EBIT =
Step 4
Rev before FC =
Step 5
Total variable costs =
Step 6
Total Fixed costs =
Step 7
Selling price =
Variable cost =
Step 8
Compute breakeven point =.

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Solution Summary

The solution computes the break-even point.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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