How to do Break Even Analysis?
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Very de sian, this question has to appear in one of the exam papers I am giving to my students, and the worse thing is there is no answer for this particular exam paper. So asking for help from forumites here, esp those who have learnt abt this before...
Question is:
Using the following information, draw up a break even chart to calculate the break-even point of this company:
Sales: $40 million
Fixed Cost: $10 million
variable Cost: 50% of sales revenue
Can any kind soul here help? I tried to do it using the algebraic formula...
Break even point = 10 million/40 - 20 = 1/2 million unit
Is this correct? But dunno how to draw the chart
haiz I shudnt even be teaching this, but dunno why this stray question appear in the exam of the module I am currently teaching now, and it is not even a Finance module.
Thanks in advance for any help
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The sales is how many months? 12?
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bump bump
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it doesnt sayOriginally posted by Darkness_hacker99:The sales is how many months? 12? -
very simple leh
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How about Variable costs per unit?Originally posted by rainee:it doesnt say -
then show me how to do lorOriginally posted by Mospeada:very simple leh -
econs arh?Originally posted by rainee:Very de sian, this question has to appear in one of the exam papers I am giving to my students, and the worse thing is there is no answer for this particular exam paper. So asking for help from forumites here, esp those who have learnt abt this before...
Question is:
Using the following information, draw up a break even chart to calculate the break-even point of this company:
Sales: $40 million
Fixed Cost: $10 million
variable Cost: 50% of sales revenue
Can any kind soul here help? I tried to do it using the algebraic formula...
Break even point = 10 million/40 - 20 = 1/2 million unit
Is this correct? But dunno how to draw the chart
haiz I shudnt even be teaching this, but dunno why this stray question appear in the exam of the module I am currently teaching now, and it is not even a Finance module.
Thanks in advance for any help
sales means revenue per sale i guess.
so TC = FC +VC = 10 + 0.5*S*40
TR = S*40
S = number of sales
so for break even should be TR= TC bah. so its at S = 0.5?
not sure i'm pretty noob
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ok...let me work on excel then post the pic hereOriginally posted by rainee:then show me how to do lor -
where you get the 0.5?Originally posted by hisoka:econs arh?
sales means revenue per sale i guess.
so TC = FC +VC = 10 + 0.5*S*40
TR = S*40
S = number of sales
so for break even should be TR= TC bah. so its at S = 0.5?
not sure i'm pretty noob
I also think it is at 0.5, but problem is how to draw up the graph? -
thanksOriginally posted by Mospeada:ok...let me work on excel then post the pic here -
let p be profit
let s be sales revenue
profit = revenue - (fixed cost + variable cost)
p = s - ( 10 + 0.5s)
Draw graph.
Breakeven means profit is 0.
When p = 0, s = 20mil -
Oh, BEA!!! I do before, even when I was pursuing engineering in one of the management modules. I remembered doing it using an excel spreadsheet for an assignment, after that I throw everything back to the lecturer already.
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done
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yea make sense liaozOriginally posted by sillyme:let p be profit
let s be sales revenue
profit = revenue - (fixed cost + variable cost)
p = s - ( 10 + 0.5s)
Draw graph.
Breakeven means profit is 0.
When p = 0, s = 20mil Thanks a lot...I go try draw the graph then u all see correct or not 
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yeap, thanksOriginally posted by Mospeada: -
i tink i oso got do it before in my economics class, then i oso forgot how to do liaozOriginally posted by ditzy:Oh, BEA!!! I do before, even when I was pursuing engineering in one of the management modules. I remembered doing it using an excel spreadsheet for an assignment, after that I throw everything back to the lecturer already.
all my colleagues oso forgot how to do it oledi -
this is basicOriginally posted by rainee:i tink i oso got do it before in my economics class, then i oso forgot how to do liaoz
all my colleagues oso forgot how to do it oledi
wait till they get to profit maximisation for four market structures
i always got lost in that one -
that was my forteOriginally posted by laurence82:this is basic
wait till they get to profit maximisation for four market structures
i always got lost in that one -
Well, wherever you're working, I hope its not commission based pay.
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that one i shudnt be teaching it...Originally posted by laurence82:this is basic
wait till they get to profit maximisation for four market structures
i always got lost in that one
leave it for the finance teacher...
i will be in the class learning from her instead -
like this correct or not?
i know the drawing is very terrible, but i m too lazy to use excel to draw -
yupOriginally posted by rainee:
like this correct or not?
i know the drawing is very terrible, but i m too lazy to use excel to draw -
thanks to everyone who has helped, both here and also in MSN
now at least i know how to answer my students' question in case they asked...