Question

1. what is the formula for break - even analysis? beq = fixed costs/selling price. example: fixed costs = $1,000; selling price = $25; variable cost = $15. reflection: what factors could make the break - even point rise or fall? 7. what are the four reasons to use break - even matters? a.

Explanation:

Break - even analysis is a key concept in business. The correct formula for break - even quantity (BEQ) is $BEQ=\frac{\text{Fixed Costs}}{\text{Selling Price per unit}-\text{Variable Cost per unit}}$. So the given formula in the question is incorrect. Factors that can make the break - even point rise include an increase in fixed costs, an increase in variable costs, or a decrease in selling price. Factors that can make it fall are a decrease in fixed costs, a decrease in variable costs, or an increase in selling price. Reasons to use break - even analysis include determining minimum sales volume for profitability, setting sales targets, evaluating business viability, and making pricing and cost - control decisions.

Answer:

1. The correct formula for break - even quantity is $BEQ=\frac{\text{Fixed Costs}}{\text{Selling Price per unit}-\text{Variable Cost per unit}}$.
2. Four reasons to use break - even analysis:

• Determine minimum sales volume for profitability.
• Set sales targets.
• Evaluate business viability.
• Make pricing and cost - control decisions.