Breakeven%20and%20Profit%20Goal%20Analysis

Breakeven%20and%20Profit%20Goal%20Analysis - (Total Fixed...

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Breakeven and Profit Goal Analysis Total Profit = Total Revenues – Total Expenses Total Profit = Total Revenue – Total Variable Costs – Total Fixed Costs Total Profit = Quantity (Unit Revenue – Unit Variable Costs) – Total Fixed Costs or Total Profit = Quantity (Unit Contribution) – Total Fixed Costs At Breakeven Total Profit = $0 So, at Breakeven: $0 = Quantity (Unit Contribution) – Total Fixed Costs adding Total Fixed Costs to both sides of the equation we get: Total Fixed Costs + $0 = Quantity (Unit Contribution) dividing each side of the equation by Unit Contribution we get: 
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Unformatted text preview: (Total Fixed Costs + $0) / Unit Contribution = Quantity Breakeven and Profit Goal Analysis (Total Fixed Costs + $0) / Unit Contribution = Quantity Remember, Total Profit = $0 at Breakeven (this is like having a profit goal of $0), so we can rewrite the above: Total Fixed Costs / Unit Contribution = Breakeven Quantity If we have a profit goal of $198,700: (Total Fixed Costs + $198,700) / Unit Contribution = Quantity Keep in mind that unit contribution contributes to two things: Fixed Costs and Profits, you have to cover the Fixed Costs before you can make a profit....
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