MINI-CASE
Smith Automotive is a company that produces component parts for automobile engines.A margin of $4 per unit produces fixed expenses of $80 million.The market demand for the component parts is 400 million units per year.
-Mini-Case Question.Calculate the break-even market share if the break-even volume is 40 million units.
A)5%
B)10%
C)12.5%
D)15%
E)20%

Question

Quizplus · Accepted Answer

The break-even market share is calculated by dividing the break-even volume by the total market demand and then multiplying by 100 to get a percentage. So, $ \frac{40 \, \text{million units}}{400 \, \text{million units}} \times 100 = 10\% $.

MINI-CASE Smith Automotive Is a Company That Produces Component Parts for for Automobile