Q3

a)Analyze the following Graph and the breakeven point and discuss how this analysis is used for decision making?

b)If fixed costs are $400,000, selling price per unit is $150, and variable cost per unit is $100, how many units must the company sell in order to earn a profit of $ 100,000?

$65 $60 $55 $50 Breakeven Point in Sales Dollars Total Revenue Line Profit Area $45 1 $40 Total Cost Line $35 Dollars (in thousands) Variable I Costs $50/Unit $30 $25 Loss Area $20 $15 $10 $5 Fixed Costs $20,000 Breakeven Point in Units 0 100 200 500 600 700 300 400 Units of Output |