Break-even quantities for high end product line Price Labor Materials Direct fixed costs Allocated fixed costs Break Even 3,500 875 1400 = 2,275 variable costs 25,000/ month 85,000/month = 110,00 fixed costs/ month FC/(Price-VC)= 110,000/3500-2,275= 90 units/month or 1,080 units per year to break eve Break even quantities for economical product Price Labor Materials Direct fixed costs Allocated fixed costs Break Even 1,000 250 300 = 550 variable costs 16,500 / month 85,000/month= 101,500 fixed costs/ month FC/(Price-VC)= 101,500 / 1000-550 = 226 units/month or 2,712 units per year to break e Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price) CM high end Break even quantities 1,225 revenue - variable costs 1,486 Break even sales + target profit/ CM Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price) CM high end Break even quantities 450 revenue - variable costs 3,600 Break even sales + target profit/ CM 1,080 units per year to break even r 2,712 units per year to break even e current sales price) the current sales price) Purchase of machinery and equipment to set up a line to produce a combination washer-dryer. 1 YEAR Sales in units Sales price Total Sales Variable cost per unit Total variable costs Fixed costs Total cash flow Present value x 8% Present Value total cash flow 159.5 Break even 2,250 358,875 UNIT*PRICE 1390 221,705 Variable cost per unit*Sales in unit 249,000 Direct fixed costs*12months (111,830) Total Sales - Total variable costs - Fixed costs 0.9259259259 (103,543.40) washer-dryer. 1 Year Sales in units Sales price Total Sales Variable cost per unit Total variable costs Fixed costs Total cash flow Present value x 8% Present Value total cash flow 2 Years 3 Years 159.5 2,250 358,875 290 2,250 652,500 319 2,250 717,750 1,390 1,390 1,417.80 221,705 249,000 403,100 249,000 452,278 249,000 (111,830) 400 16,472 0.93 0.86 0.79 103,546 (343) (13,076) Summary Initial Investment The required rate of return is NPV IRR 150,000.00 10% 172,051.53 Err:504 4 Years 5 Years 366.85 2,250 825,413 440.22 2,250 990,495 #NAME? #NAME? #NAME? 249,000 #NAME? 249,000 #NAME? #NAME? 0.74 0.68 #NAME? #NAME