# Owen Conner works part-time packaging software for a local distribution company in IndianaExample of the break-even point

### Problem Data

It is required to calculate the break-even point with the following data:

Total Fixed Costs (F)
15000
Variable Cost per Unit (V)
8
Selling Price per Unit (P)
12.5
Description
Owen Conner works part-time packaging software for a local distribution company in IndianaOwen Conner works part-time packaging software for a local distribution company in Indiana. The annual fixed cost is \$15,000 for this process, direct labor is \$3.50 per package, and material is \$4.50 per package. The selling price will be \$12.50 per package. a) What is the break-even point in units? b) How much revenue do we need to take in before breaking even?

## 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 3333.333 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 \$41666.663 to break even (No profit or loss).

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