Break-even analysis is a tool to assess the level of activity at which the business will be at break-even, that means making no gain and no loss. This is often very useful to assess the level of activity to attain a target profit.
Break even units = Fixed cost / Contribution per unit
At breakeven units, the total cost (fixed + variable) is equal to the sales value.
Let us assume that a bakery sells bread for $50 that costs $15 to make it. The fixed cost of the bakery is $7000 per month. To find out the breakeven number of bread per month the following calculations are required.
Contribution per unit = Sales Price – Variable cost = $50 - $15 = $35.00
Break even units = $7,000 / $35.00 = 200 breads
In order to breakeven the bakery will have to make at least 200 bread per month.
Mexican Motors’ market cap is 200 billion pesos. Next year’s free
Lohn Corporation is expected to pay the following dividends over the next
Use the following income statement and balance sheet for Jim’s Espresso:
You are looking at an investment that has an effective
Bowdeen Manufacturing intends to issue callable, perpetual bonds with annual coupon
Why is it that real options must have positive value?
Shadow Corp. has no debt but can borrow at 8 percent
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual
Schwert Corp. shows the following information on its 2012 income statement
Aguilera Acoustics, Inc. (AAI), projects unit sales for
