In: Accounting
You have a company that has sold 500 units for $300,000. Each unit costs $200 to make. Each year we also have a sales commission of $40 per bike. Our fixed costs are 15,000, but I want to make a target profit of $30,000.
What is the breakeven in sales
Correct Answer:
break even in sales |
$ 75,000 |
working:
A |
Sales Revenue ($ 300,000/500 Units |
$ 600 |
Less: Variable cost |
||
cost to make |
$ 200 |
|
Sales Commission |
$ 40 |
|
B |
Total Variable cost |
$ 240 |
C=A-B |
Contribution margin |
$ 360 |
D =C/A *100 |
Contribution margin ratio |
60% |
E |
Fixed cost |
$ 15,000 |
F |
Target profit |
$ 30,000 |
G = (E+F)/D |
break even in sales |
$ 75,000 |
End of Answer.
Thanks