Suppose the profit on each widget sold in Example 16.5 was $10.00 instead of $1.00. What would the BEP be if everything else remained the same?

Example 16.5

Assume the cost of producing a new product is $1,000,000. Then the BEP occurs when net profit from the product reaches $1,000,000. Let’s say the profit per widget is $1.00 and we’re selling 1,000/day. What is the BEP in years?

Need: BEP = ______ years for a project costing $1,000,000 assuming you are selling 1,000/day with a profit of $1.00 per widget.

Know–How: Equate cost to total money stream.