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  • ASSIGNMENT 3.1. - Break Even Sales Level

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    David Faraon
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    This document discusses contribution margin and break-even point (BEP) calculations. It provides an example where an item with a selling price of $10 and variable costs of $7 has a contribution margin of $3 per unit. It then shows that BEP can be calculated by taking total fixed costs of $1,800 and dividing by the $3 contribution margin per unit, resulting in a BEP of 600 units of sales.

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    This document discusses contribution margin and break-even point (BEP) calculations. It provides an example where an item with a selling price of $10 and variable costs of $7 has a contribution margin of $3 per unit. It then shows that BEP can be calculated by taking total fixed costs of $1,800 and dividing by the $3 contribution margin per unit, resulting in a BEP of 600 units of sales.

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    © All Rights Reserved
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    9 views2 pages

    ASSIGNMENT 3.1. - Break Even Sales Level

    Uploaded by

    David Faraon
    This document discusses contribution margin and break-even point (BEP) calculations. It provides an example where an item with a selling price of $10 and variable costs of $7 has a contribution margin of $3 per unit. It then shows that BEP can be calculated by taking total fixed costs of $1,800 and dividing by the $3 contribution margin per unit, resulting in a BEP of 600 units of sales.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 2

    A.

    Contribution Margin = Sales - Variable Cost

    Selling Price $ 10.00


    Variable Labor and Material $ 7.00
    Contribution Margin $ 3.00

    B.
    BEP= Fixed Cost / Contribution Margin Ratio

    Fixed Cost $ 1,800.00


    Contribution Margin Ratio $ 3.00
    Breakeven Sales $ 600.00

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