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can u explain like this formula?? please answers the question carefully step by step XYZ Company in its first year of operation produced the following
can u explain like this formula?? please answers the question carefully step by step XYZ Company in its first year of operation produced the following financialstatements: The costs of goods sold are expected to vary with sales and are a constant percentage of sales. General and administrative expenses and marketing expenses are fixed costs. The effective tax rate is estimated at 25 percent of the company's profits. a. How much EBDAT breakeven in terms of survival revenues does XYZ Company need to breakeven in the coming year! b. If the selling price of the product is $100 per unit. Calculate EBDAT breakeven point in terms of product units sold in the coming year! A. In case, Earning before depreciation after tax is zero, Survival revenue is calculated as below: By using the value of Cash fixed cost $130,000 and VCRR $0.60 to calculate the survival revenue, it can be calculated as mentioned below: SurvivalRevenue=1VCRRCashFixedCost=10.60$130,000=0.40$130,000=$325,000 Hence, the Survival revenue is Step 3/6 Working Note: 1. By using the value of General\& Administrative $60,000, marketing expense $60,000 and interest expense $10,000 to calculate the Cash fixed cost, it can be done as mentioned below: Cash fixed cost(CFC)= General \& Administrative + Marketing Expense + Interest Expense =$60,000+$60,000+$10,000=$130,000 Hence, the cash fixed cost is $130,000. Step 4/6 2. by using the value of Variable cost $180,000, Revenue (Net sales) $300,000 to calculate the variable cost revenue ratio, it can be calculated as mentioned below: Variablecostrevenueratio(VCRR)=RevenueVariableCost=$300,000$180,000=0.60 Entrepreneurial Finance 3. EBDAT is zero it can be checked as mentioned below: EBDAT is calculated with the help of MS-Excel formulas shown in the table below: The result of above formulas is shown in the table below: Hence, the EBDAT is $0. Step 6/6 B. By assuming the selling price of product is $50, Survival revue $325,000 (Calculated in Part1) to calculate the EBDAT breakeven point, it can do as mentioned below: EBDATBreakevenPoint(InUnits)=SellingPriceSurvivalRevenue=$50$325,000=$6,500 Hence, the EBDAT breakeven point for next year is
can u explain like this formula??
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