Break Even Point (BEP)
Break even point is the point at which total revenue = total cost & no profit no loss .
At break even point total contribution = total fixed cost
A ) Break Even points in number of Lawns serviced per month
total fixed cost = 3850 $
contribution per lawn = 35 $
Break even Quantity = total fixed cost / Contribution per lawn
therefore 3850$ / 35$ = 110 number of lawn services
so 110 numer of lawn service need to reach break even point
working note :
sales per lawn | 70 $ |
variable cost per lawn (less) | 35 $ |
contribution per lawn | 35 $ |
total Fixed cost | 3850 $ |
Variable cost = 20 $ +12 $ + 3 $
fixed cost= 1400 $ +150 $ +2300 $
B) Break Even Point in Dollars
sales per lawn =70 $
variable cost per lawn = 35 $
total fixed cost = 3850 $
contribution per lawn = 70$ - 35$ = 35 $
C/S Ratio = contribution per lawn / sales per lawn * 100 = 35 $ / 70 $ *100 = 50 %
Break even sales = total fixed cost / c/s ratio = 3850 $ / 50 % * 100 = 7700 $
so, company's Break Even Point in Dollars is 7700 $
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