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Manal Elkhoshkhany
Manal Elkhoshkhany, Tutor
Category: Finance
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How do I calculate the break-even point The business is a

Customer Question

How do I calculate the break-even point? The business is a livestock auction.
Submitted: 7 years ago.
Category: Finance
Expert:  Scott replied 7 years ago.

Hi there,

 

Why don't you go ahead and post your question :)

 

If I can help, I will. If not, I'm sure another expert can work with you.

 

Thanks,

Scott

Customer: replied 7 years ago.
What do you mean post my question, I thought I already did.
Expert:  Scott replied 7 years ago.

Do you have any numbers or information related to it?

-Scott

Customer: replied 7 years ago.
I do.. Do you need an Income Statement?
Expert:  Scott replied 7 years ago.

Please post all of the information you have for calculating the break even point :)

 

Thanks,

Scott

Customer: replied 7 years ago.

Income 218150.00

Cost of Sales 56110.00

Gross Profit 162040.00

 

Expenses

Salary 100092.00

Payroll tax 11850.00

Operating expenses 85588.00

Net Income -35490.00

 

What specifically is needed?

 

Expert:  Scott replied 7 years ago.

I'm going to open this question to all the experts...

 

Thanks,

Scott

Customer: replied 7 years ago.
Thanks
Expert:  Manal Elkhoshkhany replied 7 years ago.

Hello Helpmpd

 

I need to see the full problem as it ppears in your book, but before you tyoe it all, I might have your book so kindly advise the name of the book you are using: Title, author's name, and edition. Also advise the question number and I will see if I have the book

 

Regards,

Customer: replied 7 years ago.
It is not a problem in a book. I just can't recall what all it takes to calculate break - even.
Expert:  Manal Elkhoshkhany replied 7 years ago.

HelloCustomer/p>

 

I just cannot use the numbers above as I need to know which costs are fixed and which are variable. But anyway, to calculate the breakeven point in units you need to know the Total Fixed Costs, and the Contribution Margin.

 

Unit Contribution Margin (UCM) = Unit Sales Price - Variable Cost per Unit

 

Break-even point in units = Total Fixed Costs ÷ UCM

 

To calculate Break-even point in Dollars

 

1) Calculate the Contribution Margin Ratio (CMR) = Unit Contribution Margin ÷ Unit Sales Price (Or divide Toral Contribution Margin by Total Sales)

 

Break-even point in Dollars = Total Fixed Costs ÷ CMR

 

Hope this helps

 

Regards,

Customer: replied 7 years ago.

In this case (livestock auction) unit contribution margin = Price per pound - variable cost (which include- payroll, utilities, supplies, etc..?