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Breakeven comparisons-Algebraic Given the price and cost data shown in the accompanying table for each of the three firms, F,

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Answer #1

Operating Breakeven Point = Fixed Cost / [Sales Price - Variable operating cost]

a). Operating Breakeven Point for company F = $40,000 / [$17.17 - $6.14]

= $40,000 / $11.03 = 3,626

Operating Breakeven Point for company G = $28,000 / [$16.16 - $13.37]

= $28,000 / $2.79 = 10,036

Operating Breakeven Point for company H = $84,000 / [$27.24 - $12.05]

= $84,000 / $15.19 = 5,530

b). The higher the operating cost, the higher the risk will be. The firms ranked by level of risk are as follow:

Highest Risk Level = Firm H

Moderate Risk Level = Firm F

Lowest Risk Level = Firm G

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