A | B | C | D | E | F | G | H | I | J | K |
2 | ||||||||||
3 | Breakeven units are number of units that company needs to produce to cover its fixed and variable costs. | |||||||||
4 | Breakeven units can be calculated using the following formula: | |||||||||
5 | ||||||||||
6 | Break-even Units | =Fixed Costs/Contribution margin per unit | ||||||||
7 | ||||||||||
8 | ||||||||||
9 | Calculation of current breakeven point: | |||||||||
10 | Price of the product | $13 | ||||||||
11 | Variable cost of the product | $6.20 | ||||||||
12 | Contribution margin per unit | =Price of the product-Variable cost per unit | ||||||||
13 | $6.80 | =D10-D11 | ||||||||
14 | ||||||||||
15 | Fixed Cost | $309,400 | ||||||||
16 | Contribution margin per unit | $6.80 | ||||||||
17 | ||||||||||
18 | Break-even Units | =Fixed Costs/Contribution margin per unit | ||||||||
19 | 45,500 | =D15/D16 | ||||||||
20 | ||||||||||
21 | Hence current breakeven point is | 45,500 | ||||||||
22 | ||||||||||
23 | Calculation of current breakeven point: | |||||||||
24 | Price of the product | $13.00 | ||||||||
25 | Variable cost of the product | $4.50 | ||||||||
26 | Contribution margin per unit | =Price of the product-Variable cost per unit | ||||||||
27 | $8.50 | =D24-D25 | ||||||||
28 | ||||||||||
29 | Fixed Cost | $433,500 | ||||||||
30 | Contribution margin per unit | $8.50 | ||||||||
31 | ||||||||||
32 | Break-even Units | =Fixed Costs/Contribution margin per unit | ||||||||
33 | 51,000 | =D29/D30 | ||||||||
34 | ||||||||||
35 | Hence new breakeven point is | 51,000 | ||||||||
36 | ||||||||||
37 | Thus the breakeven point goes up. | |||||||||
38 |
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