(Optional) Identify the break-even point.

Identification should include

• the definition of break-even point (i.e., the point at which sales revenue equals the total cost of producing and distributing the product or service)
• the reason for conducting a break-even analysis (i.e., to evaluate profit potential)
• the formula used to calculate the break-even point (i.e., fixed costs divided by selling price minus variable costs)
• the formula used to calculate net profit or loss (i.e., total revenue [income] minus total expenses [costs]).

Process/Skill Questions:

• How does a business determine the break-even point for a product/service?
• How does the break-even point affect business decisions?
• How can the business owner communicate company financial goals to employees?
• Why is it important to determine break-even points before a business starts operation?
• When is equilibrium achieved?
• How does seasonality affect the break-even point projection?