Scribd
Upload
117 views

Example of Break Even Analysis

Colin determined that Company A's fixed costs are PHP 100,000 per month. The variable cost to produce one water bottle is PHP 2. Water bottles are sold for PHP 12 each. To calculate the break-even point, Colin determined that Company A needs to sell 10,000 water bottles per month to cover its PHP 100,000 in fixed costs. At this break-even point, Company A's revenue of PHP 120,000 (10,000 bottles at PHP 12 each) would equal its total costs of PHP 120,000 (PHP 100,000 in fixed costs plus PHP 20,000 in variable costs from 10,000 bottles).

Uploaded by

Carmella Balboa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
117 views

Example of Break Even Analysis

Colin determined that Company A's fixed costs are PHP 100,000 per month. The variable cost to produce one water bottle is PHP 2. Water bottles are sold for PHP 12 each. To calculate the break-even point, Colin determined that Company A needs to sell 10,000 water bottles per month to cover its PHP 100,000 in fixed costs. At this break-even point, Company A's revenue of PHP 120,000 (10,000 bottles at PHP 12 each) would equal its total costs of PHP 120,000 (PHP 100,000 in fixed costs plus PHP 20,000 in variable costs from 10,000 bottles).

Uploaded by

Carmella Balboa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Example of Break Even Analysis: Let’s say you own a business selling burgers

Colin is the managerial accountant in charge of It costs Php 7 to make one burger
Company A, which sells water bottles. He previously
You sell each burger for Php 12.00
determined that the fixed costs of Company A consist of
property taxes, a lease, and executive salaries, which Your cost for rent, utilities, overhead, etc is Php 100,000
add up to Php100, 000. The variable costs associated per month
with producing one water bottle are Php 2 per unit. The
water bottle is sold at a price of Php 12. How many burgers do you need to sell to break-even?

To determine the break-even point of Company A’s Break-Even Quantity = 100000/ 12-7
water bottle:
= 100000/5
Break even quantity = FC / (USP – UVC)
= 20,000
= 100, 000/(12 – 2)
Total cost = TVC + TFC = (20,000 x 7) + 100000
= 10,000
= 140,000 + 100000
Therefore, given the fixed costs, variable costs, and
= 240, 000
selling price of the water bottles, Company A would
need to sell 10,000 units of water bottles to break even. Break even amount = USP x BEQ
BEQ = 10,000 = 12 x 20, 0000
BEA = USP x BE = 240, 000
= 12 x 10, 000 To Check your answer: (breakeven qty: 20,000)
= 120,000 To check your answer:
Total cost = FC + TVC BREAKEVEN COST = Total FC + Total Variable cost
= 100,000 + (2 x 10, 000) = 100,000 + (7 x 20,000)
= 100, 000 + 20, 000 = 100,000 + 140,000
= 120, 000 = Php 240, 000
Concept of Break-even point BREAKEVEN SALES = total units x Selling price

Profit when Revenue  g” Total Variable Cost + Total = 20, 000 x Php 12
Fixed Cost
= Php 240, 000
Break-even point when Revenue = Total Variable cost +
Total Fixed Cost

Loss when revenue  l” Total Variable cost + Total Fixed


Cost

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy