# Break Even

The production of a brand of toothpaste requires a fixed cost of \$480,000.  The variable cost per unit is \$2.00.  If 80,000 toothpastes will be sold during the next month, what sale price must be chosen in order to break even at the end of the month?

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80,000 x \$2 = \$160,000 variable cost, plus \$480,000 fixed cost, total \$640,000, divided by 80,000 gives \$8 per unit to break even.

If the sales price to get even is X the equation is:
480,000 + 80,000 * 2 = 80,000 * X     (divide both sides by 80,000 to get:)
6 +2 = X
X = 8 \$

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