Question

Calculate the breakeven point using the following data. Create a table and graph with the answer you get.

Fixed Costs:

App Development Costs: $150,000

Marketing Costs: $72,000

Variable Costs:

• Average Cost Per Install (CPI) – $2.89 / install
• Cost Per Action (CPA): Register – $4.58 / install
• CPA: Register: In-app purchase – $102 / install
• CPA: Purchase – $40 / install
• CPA: Subscribe – $87 / install

Sales Price:

App membership subscription: $10 per person or $5 per student

Answer 1

Break even point = Fixed Cost / Contribution per unit

Variable cost per unit

Average cost per Install                =$2.89

Total variable cost                        = $2.89/Install

Total Fixed cost                

App Development Costs               $150,000

Marketing Costs                               $72,000

Total Fixed cost                                 =222,000             

Break Even point for person

Subscription price = $10

Contribution per install = 10-2.89= $7.11

Break Even point =222,000/7.11= 31224 persons

Break even point for Student

Contribution = $ 5 – 2.53 = $2.47

Break Even point =222,000/2.47= 89879 students