how do you determine the required sales to breakeven or determine a specific target profit once...

how do you determine the required sales to breakeven or determine a specific target profit once you determine the contribution margin

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Expert Solution

A) Computation of breakeven sales volume:

Breakeven sales volume = Fixed costs / Contribution margin per unit

Breakeven sales value = Fixed costs / Contribution margin ratio

Breakeven point is defined as the level of sales value or sales volume that is required to cover total costs consisting of both variable and fixed costs to the company. At breakeven point profit shall always be ZERO.

B) Computation of sales(units) required to achieve target profit

Sales(units) required to earn target profit = (Fixed costs + Target profit) / Contribution margin per unit

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ekkarill92 answered 1 year ago

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