Break Even Analysis w Professor Feedback .xlsx - what does...

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Unformatted text preview: what does this chart tell you? don't just provide a graph without explaining what is going on SALES SALES PRICE PER UNIT SALES VOLUME PER PERIOD (UNITS) TOTAL SALES \$3,150.00 2,000 \$6,300,000.00 Unit Contribution Margin GROSS MARGIN Contribution Margin Ratio CVP Chart 6,000,000 5,000,000 4,000,000 VARIABLE COSTS DIRECT MATERIAL PER UNIT SHIPPING PER UNIT LABOR TOTAL VARIABLE COSTS 7,000,000 \$3,900,000.00 \$280,000.00 \$1,245,000.00 \$5,425,000.00 437.50 \$875,000.00 0.1388888889 3,000,000 2,000,000 1,000,000 0 0 (1,000,000) 200 400 600 800 1,000 1,200 1,400 1,600 1,800 you have obviously used a template from somewhere. You need to explain how you determined the labor and maintenance costs. Also need to explain the administrative costs.....don't make me guess or assume..... FIXED COSTS PER PERIOD ADMINISTRATIVE COSTS INSURANCE MAINTENANCE RENT TRAVEL ADVERTISING TOTAL FIXED COSTS PER PERIOD PRE TAX PROFIT (LOSS) TAXES NET PROFIT(after tax) \$110,000.00 \$114,000.00 \$22,500.00 \$180,000.00 \$105,000.00 \$75,000.00 \$606,500.00 SALES PRICE PER UNIT TOTAL COSTS FIXED COSTS PER PERIOD TOTAL SALES VARIABLE COSTS GROSS PROFIT (LOSS) \$268,500.00 48.00% \$139,620.00 RESULTS BREAKEVEN POINT (UNITS): 1386.29 SALES VOLUME ANALYSIS: SALES VOLUME PER PERIOD (UNITS) SALES PRICE PER UNIT FIXED COSTS PER PERIOD VARIABLE COSTS TOTAL COSTS TOTAL SALES GROSS PROFIT (LOSS) this is pretax profit or loss, not gross profit. 0 0 0 0 0 0 0 200 \$3,150.00 \$606,500.00 \$542,500.00 \$1,149,000.00 \$630,000.00 (\$519,000.00) 400 \$3,150.00 \$606,500.00 \$1,085,000.00 \$1,691,500.00 \$1,260,000.00 (\$431,500.00) 600 \$3,150.00 \$606,500.00 \$1,627,500.00 \$2,234,000.00 \$1,890,000.00 (\$344,000.00) 800 \$3,150.00 \$606,500.00 \$2,170,000.00 \$2,776,500.00 \$2,520,000.00 (\$256,500.00) 1,000 \$3,150.00 \$606,500.00 \$2,712,500.00 \$3,319,000.00 \$3,150,000.00 (\$169,000.00) 1,200 \$3,150.00 \$606,500.00 \$3,255,000.00 \$3,861,500.00 \$3,780,000.00 (\$81,500.00) 1,400 \$3,150.00 \$606,500.00 \$3,797,500.00 \$4,404,000.00 \$4,410,000.00 \$6,000.00 1,600 \$3,150.00 \$606,500.00 \$4,340,000.00 \$4,946,500.00 \$5,040,000.00 \$93,500.00 1,800 \$3,150.00 \$606,500.00 \$4,882,500.00 \$5,489,000.00 \$5,670,000.00 \$181,000.00 Potential Scenario 2,000 \$3,150.00 \$606,500.00 \$5,425,000.00 \$6,031,500.00 \$6,300,000.00 \$268,500.00 SALES SALES PRICE PER UNIT(Increased price by100) SALES VOLUME PER PERIOD (UNITS) TOTAL SALES \$3,250.00 2,000 \$6,500,000.00 VARIABLE COSTS DIRECT MATERIAL PER UNIT SHIPPING PER UNIT LABOR TOTAL VARIABLE COSTS Unit Contribution Margin GROSS MARGIN Contribution Margin Ratio \$3,900,000.00 \$280,000.00 \$1,245,000.00 \$5,425,000.00 537.50 \$1,075,000.00 0.1653846154 FIXED COSTS PER PERIOD ADMINISTRATIVE COSTS INSURANCE MAINTENANCE RENT TRAVEL ADVERTISING TOTAL FIXED COSTS PER PERIOD PRE TAX PROFIT (LOSS) TAXES NET PROFIT(after tax) \$110,000.00 \$114,000.00 \$22,500.00 \$180,000.00 \$105,000.00 \$75,000.00 \$606,500.00 \$468,500.00 48.00% \$243,620.00 RESULTS Due to the instability of the market for the raw materials, it would be my recommendation to BREAKEVEN POINT (UNITS): proceed on the safer side. Every businesses have fixed cost and these are defined as the costs that doint change. the variable costs allow for flucation in the budget. reviewing variable costs it is SALES VOLUMEInPER PERIODthe (UNITS) clear the labor costs and the current price of direct SALES PRICE UNIT materials are PER the highest costs. One area for FIXED COSTS PER PERIOD future consideration should be explored once the consideration of relocating is resolved. The VARIABLE COSTS redistrubiton of labor cost can be fully evaluated TOTAL COSTS based on the market in New Hampshire. At this TOTAL SALES time the best option to increase the price of the unit sales, Zoe is able to achieve the the intended GROSS PROFIT (LOSS) profit is to increase the sales of each unit by \$100.00 this will allow for a little over 54% Summary: increase in revenue meeting the intended profit goal. 1128.37 SALES VOLUME ANALYSIS: 0 0 0 0 0 0 0 7,000,000 CVP Chart 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 0 (1,000,000) 200 400 SALES PRICE PER UNIT TOTAL COSTS 600 800 1,000 FIXED COSTS PER PERIOD TOTAL SALES 1,200 1,400 VARIABLE COSTS GROSS PROFIT (LOSS) Meets clients goals 200 \$3,250.00 \$606,500.00 \$542,500.00 \$1,149,000.00 \$650,000.00 (\$499,000.00) 400 \$3,250.00 \$606,500.00 \$1,085,000.00 \$1,691,500.00 \$1,300,000.00 (\$391,500.00) 600 \$3,250.00 \$606,500.00 \$1,627,500.00 \$2,234,000.00 \$1,950,000.00 (\$284,000.00) 800 \$3,250.00 \$606,500.00 \$2,170,000.00 \$2,776,500.00 \$2,600,000.00 (\$176,500.00) Every business has fixed cost and variable costs, these costs directly influ company’s overall revenue. Fixed cost generally remain the same, and va can fluctuate based off of desired outcomes. In reviewing the variable cos company, it is clear the labor costs and the current price of direct materia highest expenses. One area for future consideration is exploring the relo opportunities as to whether there is an option to purchase raw materials f retailer on potentially on the east coast. The redistribution of labor cost ca evaluated based on the market , potentially CA has higher cost of labor vs which may alot for a lower wage/taxiation rate. ue to the instability of the the raw materials, it would be my recommendation to proceed on the safe can fluctuate based off of desired outcomes. In reviewing the variable cos company, it is clear the labor costs and the current price of direct materia highest expenses. One area for future consideration is exploring the relo opportunities as to whether there is an option to purchase raw materials f retailer on potentially on the east coast. The redistribution of labor cost ca evaluated based on the market , potentially CA has higher cost of labor vs which may alot for a lower wage/taxiation rate. ue to the instability of the the raw materials, it would be my recommendation to proceed on the safe your desired profit for the next yearAt this time, the best option is to incre of the unit sales, you are able to achieve the intended profit by increasing each unit by \$100.00 this will allow for a little over 54% increase in revenu the intended profit goal achieving a net profit of \$243,620. need to show how you determin 1,000 PERIOD 1,200 1,400 1,600 1,800 VARIABLE COSTS GROSS PROFIT (LOSS) 1,000 \$3,250.00 \$606,500.00 \$2,712,500.00 \$3,319,000.00 \$3,250,000.00 (\$69,000.00) 1,200 \$3,250.00 \$606,500.00 \$3,255,000.00 \$3,861,500.00 \$3,900,000.00 \$38,500.00 e costs, these costs directly influences the nerally remain the same, and variable costs es. In reviewing the variable costs for your he current price of direct materials are the onsideration is exploring the relocation ption to purchase raw materials from another he redistribution of labor cost can be fully lly CA has higher cost of labor vs. east coast rate. ue to the instability of the market for mendation to proceed on the safer side to meet 1,400 \$3,250.00 \$606,500.00 \$3,797,500.00 \$4,404,000.00 \$4,550,000.00 \$146,000.00 1,600 \$3,250.00 \$606,500.00 \$4,340,000.00 \$4,946,500.00 \$5,200,000.00 \$253,500.00 how did you come up with the rel Why would raw materials be any east coast? es. In reviewing the variable costs for your he current price of direct materials are the onsideration is exploring the relocation ption to purchase raw materials from another he redistribution of labor cost can be fully lly CA has higher cost of labor vs. east coast rate. ue to the instability of the market for mendation to proceed on the safer side to meet s time, the best option is to increase the price the intended profit by increasing the sales of ittle over 54% increase in revenue meeting rofit of \$243,620. how did you come up with the rel Why would raw materials be any east coast? You look at one option -- increase increasing the volume? This shoul What about elasticity? ed to show how you determined this price 1,800 \$3,250.00 \$606,500.00 \$4,882,500.00 \$5,489,000.00 \$5,850,000.00 \$361,000.00 2,000 \$3,250.00 \$606,500.00 \$5,425,000.00 \$6,031,500.00 \$6,500,000.00 \$468,500.00 did you come up with the relocation issue? would raw materials be any cheaper on the coast? did you come up with the relocation issue? would raw materials be any cheaper on the coast? ok at one option -- increase price. How about asing the volume? This should have been analyzed about elasticity? ...
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