Chapter 21, Problem 19E

To determine

Introduction:

The problem relates to calculations involving the concept of breakeven units and breakeven sales in amount using data of question no. 16.

The break even point is that level of production at which the total revenues equals total expenses ie the point is where a company earns the same amount of revenues as much it incurs the expenses .

Since revenues equal expenses, the net income for the period becomes nil .Thus the company doesn’t lose any money during the period, but it also doesn’t gain any money either. So it is a situation of no profit and no loss.