What is the break-even sales unit?

Marketing Pricing Problem. What is the break even point in unit sales & revenue for each price point?

• The list of unit variable costs to manufacture a product is: o Labour (piece work) $ 1,000 o Parts $ 100 o Customer incentives $ 100 · Fixed costs allocated to this product are as follows: o Marketing $200,000 o Loans $ 70,000 o Insurance $ 30,000 · Your selling prices are expected to be tested at $1300 and $1500 per unit Questions What’s the breakeven point in unit sales and revenue for each price point? What happens to your breakeven targets if you add another $200 to your unit variable cost structure? Assume you can't alter your prices. Why would you try testing two prices? What are the marketing implications of these prices? I would really appreciate some help figuring this question out and steps on how to actually do it. thank you

• Answer:

  P-VC-FC=0 (1300-1200)(unit)-300000=0 100(unit) = 300000 unit = 300000/100 =3000 units if set the price at 1300 break even is 3000 units If you increase price by 1$ per unit, it is the profit of 3000 if you sell 3,000 units What happens if you increase the cost of 200 The break even point in unit will increase .. The price must be more than 1400 since the variable cost is that. In case that we set the price at 1500 first. Break even point is P-VC-FC=0 (1500-1200)(unit)-300000=0 300(unit) = 300000 unit = 300000/300 =1000 units But if the variable cost increase $200, we have to sell more to break even. The number of unit to break even increase.