Photo of a laptop on a table (c) Incremental Break-Even Unit Volume for Variable Cost Actions (IBEV)

A start-up computer company is in the process of introducing their first line of computers. These computers are high in performance and ""radically slim"" in design but will cost the company only $1,000 to produce and ship each unit. The machines are sold to retailers for $1,500.

After first year sales were projected to be a mere 15,000, the company decided to cut the manufacturer's selling price by $300 per computer.

IBEV = 15,000($500 - $200)/($1,200 - $1,000) = 22,500 units