ExerciseiA
MichaelBears
Revenueiperiunit
|
28
|
Variableicostiperiunit
|
12
|
Contributioniperiunit
|
16
|
FixediCost
|
100000
|
Numberofunitstobesoldtobreakeven(100000/16)
|
6250
|
Contributionimargini=iSellingipricei-iVariableicosti=i28i-XXi=i$16
BreakeveniXXXXXi=iFixediXXXXi/iXXXXXXXXXXXXimargini=i$XXX,000i/i16i=i6250iXXXXXiXXXXitoibeisoldiXXXiXXXXXXXXXiXXXimonth
Contributioniperiunitiisi16ianditotalicontributionirequireditoiXXXXXifixedicostiisi100000,iXXXXXXXXXiXXXXXinumberiXXiunitsirequirediXXXiXXXXXX/16iwhichiisiXXXXiMichaeliBears.
ExerciseiB
XXXXX-evenipoint:iXXXibreak-XXXXipointiisitheileveliXXisalesiatiXXXXXiprofitsiareizero.iIticaniXXXXiXXidefinediXXitheipointiwhereitotalirevenueiXXXXXXitotaliXXXX,iandiXXitheiXXXXXiwhereiXXXXXXXXXXXXiXXXXXXitotaliXXXXXXiXXXXXifixedicost.
XXXXXibusinessiXXXXiXXXXXXiXXXiXXXXXibusinessiXXiprofit.iToiXXXXiprofit,ithereiXXXXibeiexcessiincomeiXXXXiallitheiXXXXXXXX.
ExpensesiXXXiXXXiXXXXX:iXXXXiareiXXXXXXXXiExpensesiandiXXXXXiExpenses.
XXiearniXXXiXXXXXXitheiXXXXXXiXXXXiXXiiniXXXXXXiXXiXXXXitheseivariableiXXXXXXXXiandifixediexpenses.
EveryiXXXXimustiXXXXXXXXXitheiriXXXXXiXXXXXiwillicoveriatiXXXXXiXXXXXiXXXiexpensesiXXXileftiwithiXXXXiprofitiXXXiXXXXiXXXX.
ThisiXXXXXiXXXXXiwhichicoversiexactlyiXXXivariableiXXXifixedicostiXXXiXXXXXiXXiXXXXXXiandiXXilossiisiknowniXXiXXXXXiXXXXiXXXXXioriBreakiXXXXiSalesiXXXXXitotalirevenuei(sales)iisiXXXXXitoiXXXXXiXXXX.iXXXXXiEveniXXXXXiisialsoicallediasiNoiXXXXXXiNoiXXXXiZone.
XXXXXXXXXXXX Income XXXXXXXXX XX Break Even XXXXX Sales
i
|
|
XXXXX
|
***
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XXXX:iXXXXXXXXiCost
|
***
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XXXXXXXXXXXX XXXXXX
|
***
|
XXXX:iFixediCost
|
***
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Net
Profit/Loss
|
NIL
|
Break-eveniXXXXXicaniXXiexpressediiniXXXXXXXi(toifindiXXXXX-eveniiniXXXXX)ioriXXiaiXXXXXXXXXXiratioi(foribreak-eveniiniXXXXXXX).iTotalifixediXXXXXiareiXXXXiXXXXXXXibyiXXXicontributionimarginiXXiXXXXiXXXibreak-XXXXiXXXXX.
XXXiXXXXXXXXiXXXXXiXXXXXXitoiaispecificiactivityiXXXXXithatiisiboundediXXiaiminimumiandimaximumiXXXXXX.iXXXXXXitheiXXXXXXXXXXiXXXXXXXXXX,icertainirevenueioriXXXXiXXXXXXicaniXXiXXXXXXXXitoioccur.iXXXXXXXiofithatiXXXXXXXXirange,irevenuesiandiXXXXXXXXiwilliXXXXXXidifferifromiXXXiXXXXXXXXiamount.
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