For a firm, the breakeven point is the quantity of the sales required by the firm to cover its total cost, i.e., Total revenue = Total cost. At this quantity of sales the firm's net income is zero.
We know that:
F includes both fixed operating cost and fixed financing cost.
Breakeven quantity is the quantity where EBIT = 0. So, we solve for Q where EBIT = 0.
Let's say we have the following data about a company:
Price per unit = $8
Variable costs = $6
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