Owen Conner works part-time packaging software for a local distribution company in IndianaExample of the break-even point
It is required to calculate the break-even point with the following data:
- Total Fixed Costs (F)
- Variable Cost per Unit (V)
- Selling Price per Unit (P)
- 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 $12.50 per package. a) What is the break-even point in units? b) How much revenue do we need to take in before breaking even?
The following are the detailed calculations and graphs to obtain the break-even point:
a) Break-even point in units:
To calculate the break-even point in units (BEPU) we will use the following formula:
According to the results, the company must sell 3333.333 units to break even (no profit or loss).
b) Break-even point in dollars:
To calculate the break-even point in dollars (BEP$) 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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