EXERCISE 6-5 (20 MINUTES)

1. The equation method yields the break-even point in unit sales, Q, as fol-

lows:

Sales = Variable expenses + Fixed expenses + Profits

$15Q = $12Q + $4,200 + $0

$3Q = $4,200

Q = $4,200 ÷ $3 per basket

Q = 1,400 baskets