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Question 40729: . Finance Example – Break Even Analysis.
The break even point for a business is given by the formula:
where:
B = units sold to breakeven point
F = fixed costs
P = price per unit
V = variable costs
a. Suppose EducateComp knows its fixed costs are $100,000, its variable costs are
$500 per copy of AlgeComp, and they must to sell 15000 copies of AlgeComp to
break even the first year. What is the minimum price per unit they should charge?
Answer by venugopalramana(3286)   (Show Source):
You can put this solution on YOUR website! SEE THE FOLLOWING EXAMPLE
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:
Finance Example – Break Even Analysis.
The break even point for a business is given by the formula:
where:
B = units sold to breakeven point=15000
F = fixed costs=100000
P = price per unit
V = variable costs...500/COPY
a. Suppose EducateComp knows its fixed costs are $100,000, its variable costs are
$500 per copy of AlgeComp, and they must to sell 15000 copies of AlgeComp to
break even the first year. What is the minimum price per unit they should charge?
P*15000=100000+500*15000=7600000
P=7600000/15000=506.67
B) Total revenue is given by the formula TR = FC + TVC + Profit, where:
TR = total revenue=35000*506.67=17733333
FC = fixed costs
TVC = total variable costs=35000*500=17500000
EducateComp’s Sales Department has established a sales goal 35000 units. If
they achieve their sales goal, what will they profit?
TR = FC + TVC + Profit
Profit = TR + FC – TVC=..TAKING THE SALE IS AT BREAKEVEN PRICE
Profit = (units sold)(price per unit) – fixed costs – (units sold)(variable costs) =17733333-100000-17500000=133333
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