Principles of Managerial Accounting · free preview
The Break-Even Point in Units and in Dollars
The break-even point is where total contribution margin exactly covers fixed costs, leaving zero profit, computed as fixed costs divided by unit contribution margin in units or by the contribution margin ratio in dollars.
1. Zero profit as a planning anchor
Zero profit as a planning anchor
2. Break-even in units
Break-even in units
3. Break-even in dollars
Break-even in dollars
4. What break-even is not
What break-even is not
5. Break-even units computation
Fixed costs are 24,000 dollars and unit contribution margin is 20 dollars. Compute the break-even point in units.
6. Break-even dollars computation
Fixed costs are 24,000 dollars and the contribution margin ratio is 40 percent. Compute break-even sales dollars.
7. Reconciliation of the two rulers
Break-even is 1,200 units at a 50 dollar selling price. Compute the same threshold expressed in sales dollars.
8. Break-even meaning
What does operating exactly at break-even mean financially?
9. Unit contribution from break-even
Fixed costs of 24,000 dollars yield a break-even of 1,200 units. Compute unit contribution margin in dollars, number only.
10. Sales dollars at break-even from units
Break-even volume is 1,200 units and price is 50 dollars. Compute break-even sales in dollars, number only.
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