In the first quarter of your fiscal year, your financial report showed a good break even...
In the first quarter of your fiscal year, your financial report showed a good break even point (BEP). In less than 150 words, explain how you could turn this around to report some profit in the second quarter.
Homework Answers
Answer:
Break even point (Contribution = Fixed cost) can be turned into profit in following ways -
(a) Increase in number of units sold with same level of contribution p.u. and total fixed cost
(b) Increase in contribution p.u. at same level of sales (units) and total fixed cost
(c) To initiate measures which will result in savings in fixed cost with same level of contribution p.u.
Concept:
Break even no. of units = Fixed cost / contribution per unit.
Contribution per unit = Sales per unit (-) Variable cost per unit
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