2. The break even point is the level of sales at which revenue equals expenses and net income is zero. (Horngren, 2005) A break even point is typically calculated in order for businesses to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. Determine the break even point:
Break-Even Point in Units = Total Fixed Costs / Contribution Margin per Unit
Break-even point in Units = 21,000 rent, yearly + 99,000 salaries, yearly / 11.60
Break even point in Units = 10,345 haircuts.
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