Gabrielle and her business partners are starting a new business that sells organic shampoo. After analyzing the market they have a projected sales forecast showing that they must sell 50,000 bottles of shampoo in 12 months
to break-even. Calculating the variable unit cost and projected unit price gives a break-even volume of 45,000
bottles. Why should the projected unit price be changed based on the break-even volume?
a. The break-even volume is too close to the forecasted unit sales.
b. The break-even volume is much greater than the forecasted unit sales.
C. The break-even volume is drastically lower than the forecasted unit sales.
d. The break-even volume is not related to the forecasted unit sales.

(A) The break-even volume is too close to the forecasted unit sales.

Step-by-step explanation:

Gabrielle and her business partners are starting a new business that sells organic shampoo. After analyzing the market they have a projected sales forecast showing that they must sell 50,000 bottles of shampoo in 12 months to break-even. Calculating the variable unit cost and projected unit price gives a break-even volume of 45,000 bottles. Why should the projected unit price be changed based on the break-even volume?

a.

The break-even volume is too close to the forecasted unit sales.

b.

The break-even volume is much greater than the forecasted unit sales.

c.

The break-even volume is drastically lower than the forecasted unit sales.

d.

The break-even volume is not related to the forecasted unit sales.