The world’s Largest Sharp Brain Virtual Experts Marketplace Just a click Away
Levels Tought:
Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 409 Weeks Ago, 1 Day Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Apply Breakeven Analysis
Purpose
Breakeven analysis is one of the simplest yet underused analytical tools in management. It helps provide a dynamic view of the relationships among sales, costs, and profits. A better understanding of breakeven analysis can enable an organization to formulate and implement strategies more effectively. This exercise will show you how to calculate breakeven points mathematically. The formula for calculating breakeven point is BE Quantity = TFC/P – VC. In other words, the quantity (Q) or units of product that need to be sold for a firm to break even is total fixed costs (TFC) divided by (Price per Unit – Variable Costs per Unit).
Instructions
Step 1 Assume an airplane company has fixed costs of $100 million and variable costs per unit of $2 million. The planes sell for $3 million each. What is the company’s breakeven point in terms of the number of planes that need to be sold just to break even?
Step 2 If the airplane company wants to make a profit of $99 million annually, how many planes will it have to sell?
Step 3 If the company can sell 200 airplanes in a year, how much annual profit will the firm make?
Hel-----------lo -----------Sir-----------/Ma-----------dam-----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------pos-----------ted----------- so-----------lut-----------ion-----------.Pl-----------eas-----------e p-----------ing----------- me----------- on-----------cha-----------t I----------- am----------- on-----------lin-----------e o-----------r i-----------nbo-----------x m-----------e a----------- me-----------ssa-----------ge -----------I w-----------ill----------- be-----------