::: vuaskari.com ::: current paper of mgt-613 subjective

FC = Fixed Cost

R = Revenue 

VC = Variable Cost 

FC = 15,000

R = 7 per units

VC = 5 per units

 

a) Calculate Break Even point

b) Calculate Break Even point if VC increase by 10%, R Decrease by 10% and FC remain the same

Solution: 

a) Break Even point = FC / R -VC

Break Even point = 15,000 / 7 - 5

Break Even point = 15,000 / 2

Break Even point = 7,500

b) 

VC increase by 10% = 5 *10 /100 = 0.5

VC = 5 + 0.5

VC = 5.50

R Decrease by 10% = 7 * 10 /100 = 0.7

 R  = 7 - 0.7 

 R = 6.30

Break Even point = FC / R -VC

Break Even point = 15,000 / 6.30 -5.50

Break Even point = 15,000 / 0.80

Break Even point = 18,750

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