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Breakeven Analysis from Contribution Margin

What is the breakeven point from the given below information?
fixed costs $20,000
variable costs 33% of sales
avg selling price is $10,000

a) As % of sales, what is its variable or contribution margin?
b) If the average sale is $10,000 what is the contribution margin/vehicle?
c)1. what is the breakeven volume in $ of revenue?
2. what is breakeven in units (knowking no one wishes to buy 2/3 or 1/5 of a car)

d) If fixed costs increased to $30,000, what would breakeven be?

e) Why do we care about breakeven, and cost-volume-profit?

Solution Preview

What is the breakeven point from the given below information?

fixed costs $20,000
variable costs 33% of sales
avg selling price is $10,000

a) As % of sales, what is its variable or contribution margin?

Selling price= 100%
Variable cost= 33%
Therefore Contribution margin (%)= 67% =100%-33%

b) If the average sale is $10,000 what is the contribution margin/vehicle?

Average selling price= $10,000
Contribution margin / vehicle= $6,700 =67%*$10,000

c)1. what is the ...

Solution Summary

Calculates breakeven point and carries out the break even analysis.

$2.19