Question

How is breakeven point determined for the answer to

After taking business classes, Jake, an avid dog-lover, decided to start selling unique pet supplies at trade shows. He has two products:  

Product 1:   "Launch-it"-   a tennis ball thrower that will sell for $10.

Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the dog places his paw on the pedal.   The treat dispenser will sell for $30.

Costs:    Jake has hired an employee to work the trade show booths.   The work contract is $1,000 per month plus a commission equal to 10% of revenue.    Jake will also spend $500 per month on trade-show entry fees. Jake is purchasing the products from a supplier in Mexico.    Launch-its cost $1 each;   Treat-times cost $7 each.     Shipping and handling on the Launch-its will cost $2 each; Shipping and handling on the Treat-times, which are heavier, will cost $8 each. The shipping and handling costs will be paid by Jake, not the customer.

Assume Jake expects to sell 200 Launch-its and 100 Treat-times during his first month of operations (June).

Jake's financial goal is to earn an operating income of $8,000 per month.    He believes volume may grow at a rate of 5% a month.

I see available answers for each product:

Product #1

Unit CM

CM %

Breakeven point:

-in units

-in sales revenue

Target profit volume:

-in units

-in sales revenue

But I need help with the formulas.

Answer 1

Produt 1
Unit CM	6	(Sales - Material Cost - shipping and hadnling chgs-sales commission)
CM %	60%	(Unit CM/Unit Sales Price)*100
Breakeven point
- in units	250	(Fixed costs/CM per unit) ie (1000+500)/6
-in sales revenue	$2,500	(BP units * SP)
Target Profit Volume
- in units	1583	(Fixed cost)+Target Profit/CM per unit ie ((1000+500)+8000)/6
-in sales revenue	15833