BREAK-EVEN ANALYSIS COMPANY "A" PLANS TO SALE UNITS FOR $100 VARIABLE COST: 1.Employee Wages $8 per...
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BREAK-EVEN ANALYSIS • COMPANY "A" PLANS TO SALE UNITS FOR $100 • VARIABLE COST : 1. Employee Wages $8 per Hour (4 hours per unit) 2. Supplies $1 per Unit 3. Other Variable Cost $2 per Unit Total - $35 • FIXED COST : 1. Depreciation $3,000 2. Factory Lease $7,000 3. Advertising Cost $6,000 4. Other Fixed Cost $4,100 Total - $20,100 Employee wages $32 (5 hours* $8/hour), supplies $1, Other variable $2
BREAK-EVEN ANALYSIS COMPANY "A" PLANS TO SALE UNITS FOR $100 VARIABLE COST: 1.Employee Wages $8 per Hour (4 hours per unit) 2.Supplies $1 per Unit 3.Other
Slide 2 BREAK-EVEN ANALYSIS COMPANY "A" PLANS TO SALE UNITS FOR
$100 VARIABLE COST: 1.Employee Wages $8 per Hour (4 hours per unit)
2.Supplies $1 per Unit 3.Other Variable Cost $2 per Unit Total -
$35 FIXED COST: 1.Depreciation $3,000 2.Factory Lease $7,000
3.Advertising Cost $6,000 4.Other Fixed Cost $4,100 Total - $20,100
Employee wages $32 (5 hours* $8/hour), supplies $1, Other variable
$2 Slide 3 BREAK-EVEN IN SALES Units Price Variable Cost =
Contribution per Unit $100 - $35*= $67 Contribution per Unit Sold
Fixed Cost / Contribution per Unit Sold = Break-even in Units Sold
$20,100 / $67 = 300 Units to Break-even Slide 4 TO EARN A PROFIT OF
$21,000 (Fixed Cost + Target Profit) / Contribution = Units Sells
Required to Reach Target Profit ($20,100 + $21,000) / $67 = 600
Units Sold to Earn $21,000 Profit
