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    Breakeven Analysis from Contribution Margin

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    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?

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    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

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