Discussion
The breakeven production quantity is the number of aircraft at which
Answer: C
Correct answer: Cumulative revenue equals cumulative cost
The breakeven quantity is the number of aircraft at which cumulative revenue finally covers cumulative cost, including the development spend incurred before the first delivery.
\[ N_{BE} = \frac{\text{fixed cost}}{\text{margin per aircraft}} \]
It is the central figure in a programme's business case, because until it is passed the programme has consumed cash without returning it. For a large transport it commonly runs to several hundred aircraft, which is why so few programmes are launched and why launch orders matter so much.
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