# 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.

## Presentation on theme: "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."— Presentation transcript:

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 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

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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