Pricing Basics Price (P), Total Revenue (TR), Total Cost (TC), Fixed Costs (FC), Variable Costs (VC), Unit Variable Costs (UVC), and Break-Even Point (BEP) How to calculate a break-even point? BEPQuantity = Fixed Costs . = FC . Price Unit Variable Costs P UVC What is the profit equation? Profit = Total Revenue Total Cost = (P Q) [FC + (UVC Q)]

2. If Washburn achieves a sales target of 3,000 keyboards, what will its profit be at the $359 retail price?

Profit based on 3,000 units sold at a retail price = $359.

Quantity sold (Q) = 3,000 units

Retail Price = $359; Retail markup = 50%; Net Price (P) = $179.50/unit

Fixed Costs (FC) = $20,000 (rent) + $4,000 (utilities) + $6,000 (depreciation)

Unit Variable Costs (UVC) = $35/unit for materials + (8 hours/unit $15/hour) for labour