Break-even analysis, would someone please help?

Question

the company is hoping to begin exporting to the US within next tweleve months. the company will export the sports game product and expects to sell 500 units per month at $60 each

variable price = $45

fixed cost = $10 000 per month

The company has set a target profit of $12 000 for the first year

i can't plot a graph properly :-(

break-even quantity= fixed costs / contribution per unit

10 000/15 = 667 units

break-even revenue = 40 000?

Answer 1

You can download a free break-even calculator at ..

www.mep.org

Click on the ARTICLES link and scroll to the bottom of the page.

Answer 2

breajkeven revenue is 667 * 60 = 40 0020


please refer to this link :

http://www.tutor2u.net/business/production/break_even.htm

I'm just an amateur.

But ill try to explain.

Breakeven analysis is also called cost-volume profit analysis.

here your variable cost = 45 * 500 = 22500

and fixed cost = = 10 000

total cost = = 32500

whereas selling cost = 500 * 60 = 30 000

so profit is basically 2500

now to draw the chart first draw both the axis. x axis is output and y axi represents cost.


then starting from the negative(y axis) - plot 20 000 at zero level output.

why negative ? because fixed cost at zero level production is a loss


Use this formula to calculate cost at any level output :

a + bx = cost at any level of output

where a is fixed cost

b is variable cost

x is level of output

now say 0 units

20 000 + 45 * 0 hence at 0 units cost is 20 000 but revenue is zero so plot 20 000 on the y axis negative

now similarly calculate the variable cost and fixed cost at 2 output levels and join them by a straight line ( not sure of this one, needs experimentation)

Answer 3

Variable cost = 45 and sell price = 60
so profit per piece is 15
The number of units to be sold should be such that it should meet the fixed cost of 10000
so break even sales is

10000/15 = 834 units.

Any sale above this value will generate overall profits
Sales below this value will not be able to meet the fixed costs and hence will result in loss.