Activity: Breakaven analysis toa business manufachuring comeuter cabling Her ese

Question

Activity: Breakaven analysis toa business manufachuring comeuter cabling Her esearch had saran was planning revealed the following trancial budget for her firat year of speration (100,000 units)$80,000 Cost of sale Oirect labour 400,000 $200.000 5200,000 Rent Wage Power and eloaoty 50,000 80,000 $30,000 Lease costs Total expenses Net proft before tax 530.000 $100 ,000 $10,000 1. Assuming that Sarah intends for each catie to sel for $8.00, calcuiate her bresi evan volume in units 2. Estimate at what point during her frst yer Sarah can reasonably expect for the business to break even (Assume a constant level of sales) 1, Breakeven volume 2 Tming of breskeven "

Explanation / Answer

Image quality is very poor.

Break-Even Point in Units = Fixed Costs / (Sales Price Per Unit - Variable Costs Per Unit)

= 190000/(8-6)

95,000 units

2)

Assuming sales are uniform in a year, and taking 1 year=365 days

95000*365/100000

=346.75 or 347 days

She can expect to break even at 347 days assuming a constant level of sale

1) Sales(Units) 100000 Sales(price per unit) $8 Variable cost total $   600,000

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