Question
I am working on a break even point formula. Are my calculations accurate? Am I right to price it at $12? How would I figure
I am working on a break even point formula. Are my calculations accurate? Am I right to price it at $12? How would I figure out how much money I would need to have IN HAND when opening a business, in order to reach that point? Are there any cash flow issues I should consider? Below are the following calculations:
-
Total fixed costs ($3,000)
-
Sales price per unit ($12.01)
-
Variable cost per unit ($1.57)
-
Anticipated unit sales (100,000)
-
Break even point: Fixed costs (Sales price per unit Variable costs per unit) = 288 units
-
contribution margin (sales per unit- variable costs per unit) = $10.44
I think the break even time depends on the price and production volumes. For instance, if the goal is to earn $100,000 in total sales of barbecue cleaner in a given period, I would need to sell 288 units in order to cover our fixed costs. If I sell the anticipated 100,000 units then our profit/loss would be $1,039,000.The product should be priced by using the average selling price formula. Average selling price = total revenue earned by a product number of products sold. $1,200,000 100,000. The selling price would equal $12.00.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started