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Published byJudah Locklair Modified over 2 years ago

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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

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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

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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

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