As the owner of the small business, you are tasked to determine the right price for your product before you open your business. In your business, you have a fixed cost of ₱50 000, and the variable cost per unit is ₱100. Using the formula for the break-even point, you must analyze the number of units needed to produce to break-even. You must also observe what will happen to the break-even units as the price approaches zero or infinity.
As the owner of the small business, you are tasked to determine the right price for your product before you open your business. In your business, you have a fixed cost of ₱50 000, and the variable cost per unit is ₱100. Using the formula for the break-even point, you must analyze the number of units needed to produce to break-even. You must also observe what will happen to the break-even units as the price approaches zero or infinity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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As the owner of the small business, you are tasked to determine the right price for your product before you open your business. In your business, you have a fixed cost of ₱50 000, and the variable cost per unit is ₱100. Using the formula for the break-even point, you must analyze the number of units needed to produce to break-even. You must also observe what will happen to the break-even units as the price approaches zero or infinity.
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