AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
For Dummies Template Generator3/22/2021
You can use a couple of different ways graphs and formulas to analyze where your break-even point falls.This sales volume is the point at which total sales equals total costs.
The graph indicates that the companys break-even point occurs when the company sells 34 units. Therefore, if you sell whole units, the break-even point must always be a whole number. This fact means that if break-even analysis results in some fractional volume of sales (such as 33.33333 units), you should always round up (in this case, to 34 units), even if the fraction is closer to the lower whole number than the higher number. If you rounded down (to 33 units), then the actual sales volume would be below the break-even point, and at this volume level, your company would report a net loss. In that case, you want to rely on the three formulas that use contribution margin to measure net income. Better yet: At the break-even point, total contribution margin equals fixed costs. ![]() Now suppose a company has contribution margin per unit of 6 and fixed costs of 600. If your formula gives you units and you want dollars, multiply the number of units by the sales price. If your formula gives you dollars and you want units, just divide by the sales price.
0 Comments
Read More
Leave a Reply. |