I need some help with this Break-even analysis. There is a solution provided in Course Hero but it doesn't really help and I am still having trouble understanding it. Below is the background of the assignment and the five questions that follow.

Break-even analysis attempts to determine the volume of sales necessary for a manufacturer to

cover costs, or to make revenue equal costs. It is helpful in setting prices, estimating profit or loss

potentials, and determining the discretionary costs that should be incurred. The general formula

for calculating break-even units is:

Break-even Units = total fixed costs / unit selling price - unit variable cost

In StratSim, total fixed costs can be broken into discretionary marketing expenditures, and fixed

costs for plant and overhead. The selling price is the MSRP less the dealer discount, and the cost

of materials and labor make up the variable cost. This assignment requires allocating fixed costs

across a portfolio of products and calculate the break-even units for each product.

A firm's production capacity is 1.5 million units, with annual fixed costs of $3.2 billion for

depreciation, plant maintenance, corporate marketing, and general overhead. Additional values

for the three vehicles produced and sold by the firm are shown in the table below:

VEHICLE X VEHICLE Y VEHICLE Z

MSRP $15,999 $20,999 $25,999

Dealer Discount 10% 12% 15%

Variable Cost $11,799 $13,599 $16,899

Adv. & Promo. $35 million $50 million $70 million

Prev. Unit Sales 400 thousand 600 thousand 300 thousand

1. How will you allocate the fixed costs across the products?

2. Calculate the break-even units for each product, showing the intermediate calculations for

the allocated fixed costs and selling price (dealer invoice).

3. What impact does a 10% drop in MSRP have on the break-even point for each vehicle?

4. Using the original MSRP, recalculate break-even if advertising and promotion expense for

each product is doubled.

5. What impact might the introduction of a new product in your vehicle line have on fixed costs

and the break-even calculation?