Finance: Break Even Point for Financial Operations
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Problem: (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
This solution is comprised of a step by step response detailing how to solve each component of this problem. First, we solve for the missing pieces and then we can find the breakeven. Computations are done in Excel for the student.
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Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
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