Accounting. Working out break even.?
Breakeven & CVP Analysis.
‘The Chocolate Eggy Company Ltd’ is a small company that produces boxes of chocolate eggs. Each box sells for $25.00. Variable costs are $15.00 per unit and fixed costs total $35,000 per month.
a) Calculate the breakeven point in units (boxes) and dollars. Show your workings.
Break-even sales in units = Fixed costs/Unit contribution margin.
Break-even sales in dollars = Fixed costs/Contribution margin ratio.
Unit contribution margin= (25-15)= 10
Contribution margin ration= (10/25)= 0.4
35,000/10= 3,500 units
Have I done this correct?
Second part is where I get stuck.....
Calculate the sales, in units (boxes) and dollars, necessary to provide a profit before tax of $6,000 a month. Show your workings.
- ChrisLv 69 years agoBest Answer
For part 2...you make $10 per box, so to get a $6,000 profit you need to sell $6,000 / 10 = 600 boxes in addition to the 3,500 = 4,100 boxes.
4,100 boxes x $25 per box = $102,500.
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