Break-even point calculation
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Equation 9-3: B=FC / (P-V), where B = break-even demand, FC = fixed cost of setting up for production, P= unit price, and V = variable cost of production.
A clinic currently sends out its laundry at an average cost of $10 per load. If it acquires its own laundry facilities, at a cost of $500, its average cost per load will fall to $6. What is the break-even point, in loads?
a. 250
b. 125
c. About 62
d. About 31
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This posting provides details on calculation of break-even point using fixed cost, unit cost/variable cost and quantity produced.
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