Dr. Aleda Roth, Prolific Author - DSI Publishing, Inc.Example of the break-even point
Problem Data
It is required to calculate the break-even point with the following data:
- Total Fixed Costs (F)
- 250000
- Variable Cost per Unit (V)
- 20
- Selling Price per Unit (P)
- 30
- Description
- Dr. Aleda Roth, Prolific Author - DSI Publishing, Inc.Dr. Aleda Roth, prolific author, is considering starting her own publishing company.She’ll call it DSI Publishing, Inc.Her estimated costs are: Fixed $250,000, Variable cost per book $20, Selling price per book $30. How many books must DSI sell to break even? What is the break- even point in dollars?
Solution
The following are the detailed calculations and graphs to obtain the break-even point:
Step 1:
a) Break-even point in units:
To calculate the break-even point in units (BEPU) we will use the following formula:
According to the results, the company must sell 25000 units to break even (no profit or loss).
b) Break-even point in dollars:
To calculate the break-even point in dollars (BEP$) we will use the following formula:
The company must sell to obtain revenues of $750000 to break even (No profit or loss).
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