A production process requires a fixed cost of $50,000 and the variable cost per unit is $25. The revenue per unit was projected to be $45, but a recent marketing study shows that because of an emerging competitor, the revenue will be about 12% lower
How does this affect the break-even point?
What will be an ideal response?
Answer: The break-even point will be higher, at 3424 units, which is a 37% increase.
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