To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage . would recaver the invested costs is to calculate how many units or how much in doblar sales is necessary for the firm to earn a profit. Consider the cose of Free Spirit Industries Inc.: Free Spirit Industries Inc. Is considering a project that will have fixed costs of $15,000,000. The product will be sold for $32.50 per unit, and will incur a variable cost of $10.75 per unit. Given Free Spirit's cost structure, it will have to sell units to break even on this project (QaE). Free Spirit's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 150,000 units. However, she also thinks that the demand for Free Spirit's product is relatively inelastic (so the firm can increase the sales price without signincantly decreasing the volume of product soid). Assuming that the firm can sell 150,000 units, what price must it set to break even? $121.83 per unit $105.21 per unit Free Spirit's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 150,000 units. However, she also thinks that the demand for Free Spirity, product is relatively inelastic (so the firm can increase the saies price without significantly decreasing the volume of product sold). Assuming that the firm con sell 150,000 units, what price must it set to break even? $121.83 per unit \$105.21 per unit $110.75 per unit $132.90 per unit What affects the nirm's operating break-even point? Several foctors affect a firm's operating bresk-even point. Bosed on the scenarios described in the following table, indicate whether these foctors would increase, decrease, or leave unchanged a firm's break-even quantity-assuming that only the listed factor changes and all other relevant factors remoin constant. What affects the firm's operating break-even polnt? Several factors affect a firm's operating break-even point. Based on the scenarios described in the following tabie, Indicate whether these factors would increase, decrease, or leave unchanged a firm's break-even quantity-assuming that only the listed factor changes and all other relevant factors remain constant. When other things are heid constant, the higher a firm's operoting leverage, the will be its business risk