Often a firm will calculate the break-even point for a price. That is, if we set the price at $X, then how many units will we need to sell to cover costs (that is, our break-even point). Work through the following two examples to gain a better understanding of this approach. Fixed Costs = $10,000 Variable Costs = $10

Breakeven point= fixed costsprice-varable cost

Using break-even analysis calculate:

1. How many units need to be sold to break-even if the product is sold for $40?

2. How many units need to need to be sold to break-even if the product is sold for $25?