Break-Even Analysis Intro: Break-even analysis helps determine when the business revenues equal its costs. There are several types of costs to consider when conducting a break-even analysis, such as fixed costs, which are constant regardiess of the number of units sold, and variable costs which are recurring costs absorbed with each unit sold (e.g., labor, materials, etc.). To find a breakeven point, the following formule can be used: Breakeven Point = Fixed Costs/Profit = Fixed Costs/(Unit Selling Price - Variable costs) Mikey W. Smitty, an emerging rapper, is getting ready to produce his first CD. The cost of recording it $5,000, but copies are $5 a piece. Part A: If the CDs can be sold for $15 each, how many CDs must be sold to break even? What is breakeven point in dollars? Part B: The rapper is confident that demand will well exceed the break-even point, and he is contemplating having its CD cut by a higher quality (and more costly) studio. The cost of recording is $9,000, but single CD costs are $2 for high volumes. If the CDs can be sold for $15 each, how many CDs must be sold to break even? Part C: Compare result B with A. For what volume of demand should the rapper choose the costlier studio