Final answer:
Managers determine the breakeven point by analyzing the relationship between price, marginal revenue, and marginal cost. To achieve a target operating income, they adjust the output level accordingly.
Step-by-step explanation:
Managers can determine the breakeven point or the output needed to achieve a target operating income by analyzing the relationship between price, marginal revenue, and marginal cost. To calculate the breakeven point, managers need to determine the quantity at which price equals marginal cost. This is the output level where the company is neither making a profit nor a loss. To achieve a target operating income, managers need to analyze the profit-maximizing output level by considering the price, marginal revenue, and marginal cost. They can then adjust the output level accordingly to reach the desired target income.