How do you conduct a break even analysis and can one be done with the following information, using the numerical calculations break-even analysis?
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How do you conduct a break even analysis and can one be done with the following information, using the numerical calculations break-even analysis?
A County Sheriff's Department sells its products (officers) to contract cities at a cost of $197,000 per officer. Each officer works 40 hours per week. The contract city purchased 21 officers for the 2006-2007 fiscal year. They have 11 vehicles. It has the following annual costs:
Item Annual costs
Rent $1,100,000
Officer salaries $86,000
Vehicle maintenance and fuel $11,500 per vehicle
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Solution Summary
The expert conducts a break even analysis for a county Sheriff''s department. A contract city purchase is examined.
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Here: We first need to separate the variable cost and fixed cost. Variable cost is the cost which increases directly in proportion of the sales. Hence, officer's salary is a variable cost. Rest contracts are generally long term and one cannot change the rent expenses once the commitment is made. Thus, it is a fixed cost. Now the point of confusion is vehicle cost. ...
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