BREAK EVEN POINT(BEP)
Break even point
| Break even point in units | fixed cost/(price-variable cost) | 150,000/(30-18)=12500 units |
| Break even point in sales | Fixed cost/(price-variable cost)*price | 150,000/(30-18)*30=$ 375,000 |
| Net income if 12,000 shoes are sold | Sales |
360,000 |
| Less variable cost |
-216,000 |
|
| Contribution |
144,000 |
|
| Less fixed cost |
150,000 |
|
| net loss |
6,000 |
|
| BEP if commission is increased by 0.75 | ||
| Sales commission |
5 |
|
| Variable cost |
19 |
|
| BEP in units | 150,000/(30-18.75)=13,333 units | |
| BEP in sales | 13,333*30=$400,000 | |
| Net income if commission is increased by 0.05 | Sales |
450,000 |
| less variable cost | 101.35*15,000=$1,520,250 | |
|
-1,070,250 |
||
| Less fixed cost |
150,000 |
|
| net loss |
1,220,250 |
|
| BEP in units if salary is increased by $31,500 | BEP in units | 181,500/(30-13.50)=11,000 units |
| BEP in sales | 11,000*30= $330,000 |
CVP graph
Units
References
Break even (economics). Retrieved from
http://en.wikipedia.org/wiki/Break-even_%28economics%29 on 13-11-2011
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