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)] Questions

1. In Washburns factory, what is the break-even point for the new keyboard if the retail price is $359? Retail price = $359 Retail Price = $359; Assume Retail Markup = 50%; Net Price (P) = $179.50/unit (NOTE: the manufacturer (Washburn) does not receive the full retail price. The retailer (likely a music store) will receive the retail markup, or $179.50. Fixed Costs (FC) = $20,000 (rent) + $4,000 (utilities) + $6,000 (depreciation) = $30,000 Unit Variable Costs (UVC) = $35/unit for materials + (8 hours/unit $15/hour) for labour = $155/unit