Financial operations for manufacturing


Problem:

I am an analyst in the office of financial operations for a manufacturing firm that produces a single product. I have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units.

Using this information, find the break-even point in units of output for the firm.

Return on operating assets = 25%
Operating asset turnover = 5 times
Operating assets = $20 million
Degree of operating leverage = 4 times

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Finance Basics: Financial operations for manufacturing
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