Calculating the Break-Even Point

Although the financial goal is to create profit, we need to calculate the breakeven point to get started.

Variable Cost defines the cost of a single assembled product based on the materials consumed and labor invested directly in unit production. To illustrate our point, we can say that making a single baked potato with all of the fixings will cost $3.00 to produce (potato, sour cream, chives, plate, fork, napkin and labor). If we decide to go into the baked potato business, we must then sell these potatoes for at least $3.00 per unit. Any less would cause us to lose money on the endeavor. This cost cannot be made up by increasing volume of sales. Judy Koch discussed the fact that bulk purchases can benefit you reduce these variable costs. If we decided to purchase potato-making materials in larger quantities and hired more workers to produce these products, we could

Determine the unit break-even point, assuming fixed costs are $60,000 per period, variable costs are $16.00 per unit, and the sales price is $25.00 per unit.

The break-even point in units for computer paper is $52,000.00. Meaning to break-even, you have to sell $52,000.00 of units of computer paper. “The margin of safety, expressed in either dollars or a percentage, shows how much sales can be reduced without sustaining losses” (Schneider, 2012). The formula to find margin of safety in dollars is: margin of safety in dollars equals the actual (or expected) costs minus the break-even costs. So in the case of computer paper. The actual cost of $30,000.00 minus the break-even point of $52,000.00 gives you the margin of safety of -$22,000.00. Meaning you can cut the sales of computer paper by $22,000.00 and not sustain a loss.

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

Breakeven = £1 million/£25 = 40,000 subscriptions Given you need 40,000 subscriptions to breakeven, do you move forward?

Based on the Excel Problem of chapter one, if the total capacity for this business is 725 will you stay in it? If you want to stay in it what price you need to obtain a break even point of 725?

According to this method, every unit of the product is assigned all direct, fixed, and variable costs. This method includes the cost of direct materials and labor as well as a portion of the overhead costs associated with it in the final costing of every unit of the product.

A variable cost is a corporate expense that varies with production output. Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases (Variable Cost, n.d.); in the case study for all cost per event such

Breakeven = fixed cost/margin = total dollar fixed costs/ unit selling price –unit variable costs

While it is useful to know the quantity of sales at which a product will cease to generate losses, it may be even more useful to know the quantity necessary to generate a desired level of profit, say D.

Variable costs are costs that vary with output. Variable cost changes according to the quantity of a good or service being produced. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc. The inputs of Listerine start with Raw Materials (generally composed of diluents, antibacterial agents, soaps, flavorings,

When price is $20.6, the quantity is 1,242,425 and profit is $101, we come near to break even point.

Break Even Point in Sales = (Total Fixed Costs + Target Profit) ÷ Contribution Margin Ratio

This shows that the number of cars we need to wash is about 21 to