Multiple-Level Break-Even Analysis Nielsen Associates provides marketing services for a number of small manufacturing firms. Nielsen receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $0.02 per sales dollar Sales-level costs $100 per sales order Customer-level costs $800 per customer per year Facility-level costs $60,000 per year (a) Determine the minimum order size in sales dollars for Nielsen to break even on an order. $Answer (b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer. $Answer (c) What is the average order size in (b)? $Answer (d) Assuming Nielsen currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. $Answer (e) What is the average order size in (d)? $Answer (f) Explain the differences in the answers to (a), (c), and (e). The most important costs to cover are unit level costs. In multiple customer firms the break-even point decreases as the number of customers increases. Even if individual orders have a positive contribution, some customers may be unprofitable. In the long-run the most important costs are facility level costs.