Explore BrainMass

Explore BrainMass

    Operating below the break-even point cannot raise prices

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    If companies that are operating below the break-even point cannot raise prices, what must they do to break even? (400 words)

    © BrainMass Inc. brainmass.com June 4, 2020, 12:04 am ad1c9bdddf
    https://brainmass.com/business/finance/operating-below-break-even-point-cannot-raise-prices-318006

    Solution Preview

    Dear studcent,

    If companies that are operating below the break-even point cannot raise prices, what must they do to break even? (400 words)
    Breakeven point of sale is the sale when the company earns no profit and no loss. At the breakeven point, sale is equal to total cost. Here, total cost is variable cost and fixed costs. At the breakeven point, contribution is equivalent to fixed costs. Therefore, formula for computing Breakeven point in units= fixed costs for the period/contribution per unit.
    Contribution per unit= selling price per unit-variable cost per unit.
    Breakeven point in dollar sales= fixed cost for the period/ contribution margin ...

    Solution Summary

    The expert examines operating below the break-even point cannot raise prices.

    $2.19

    ADVERTISEMENT