Question

need help calculating the break even revenue thank you

Question 2: CVP relation version 2 Current sales revenue is $5,000, total variable costs are $2,000, and total fixed costs are $2,000 (no data on units). a) Compute the contribution margin ratio: CMR = .6 b) Write down the CVP relation (version 2): profit as a function of sales revenue. Profit = 6 * Revenue - 2000 (e.g., if profit = 0.1*Revenue-500, enter 0.1 in the first box and 500 in the second box). c) Predict profit at sales revenue of $10,000: 4000 d) Your boss gave you a profit target of $5,000. How much do you need to sell in dollars to meet this target? 11666.67 e) Compute the breakeven revenue: 4000 X f) When sales revenue increases by $1,000 (from any Initial level in the relevant range), profit increases by: CMR $1,000 - $600 not enough information (1-CMR)* $1,000 - $400

Answer 1

Break even revenue = Fixed costs / Contribution margin ratio

==> Fixed costs = $2,000

==> Contribution margin ratio = 0.6

==> Break even revenue = $2,000 / 0.6 = $3,333.33