A theater has fixed operating costs, such as electricity, salaries, and rent. What is this break-even point called

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18-11-2021
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A theater has fixed operating costs, such as electricity, salaries, and rent. What is this break-even point called

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Tundexi Tundexi · Answer 1 · 2021-12-01T10:48:31+01:00

The fixed operating cost in the question is one of the requirement to be used to calculate the Break even units not the break-even point.

Usually, the break-even point is the point where the total revenue equals the total costs of the business.

In other word, the break-even point means that the expenses and revenue are equal and thus, the company will record neither a net loss or gain.

The formula used to derive the Break even unit is [Fixed Costs / (Sales price per unit – Variable costs per unit)}

Therefore, the fixed operating cost in the question is one of the requirement to be used to calculate the Break even units not the break-even point.

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