Bifurcation of Costs into fixed and variable | ||||||
Fixed | Variable | Total | ||||
Cost Of Good Sold | $ 21,00,00,000 | $ 63,00,00,000 | $ 84,00,00,000 | |||
(25%:75%) | ||||||
Marketing, General And Admin | $ 28,00,00,000 | $ 28,00,00,000 | $ 56,00,00,000 | |||
(50%:50%) | ||||||
Total | $ 49,00,00,000 | $ 91,00,00,000 | $ 1,40,00,00,000 | |||
Therefore variable cost per barrel = $910000000/35000000 | ||||||
=$26 per barrel | ||||||
Sales Price Per Barrel = $3360000000/35000000 | ||||||
=$96 per barrel | ||||||
Contribution Margin Per Barrel = $96 -$26 =$70 | ||||||
Break-Even Point For Current Year | ||||||
Therefore Break-Even Point = Fixed Cost / Contribution Margin per Barrel | ||||||
=$490000000/70 | ||||||
=70,00,000 Barrels | ||||||
Or 7 Million Barrels | ||||||
Break-Even Point For Following Year | ||||||
Revised Fixed Cost = $14700000+490000000 | ||||||
$ 50,47,00,000 | ||||||
Therefore break-even point | ||||||
=$504700000/$70 | ||||||
=72,10,000 Barrels | ||||||
or | ||||||
7.21 million | ||||||
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