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Homework answers / question archive / Here is the information from Wind Total Sales (soo bikes) $ 250,000 Lew : Variable expende 150,000 Contribution margin $ 100,000 Less: fixed expense Wet income $ 20,000 Pen Unit $ 500 300 200 bem 40% 80, ona bikes cas Calculate the Breakeven point using the equation method
Here is the information from Wind Total Sales (soo bikes) $ 250,000 Lew : Variable expende 150,000 Contribution margin $ 100,000 Less: fixed expense Wet income $ 20,000 Pen Unit $ 500 300 200 bem 40% 80, ona bikes cas Calculate the Breakeven point using the equation method. (6) Using the information above, calculate the breakeven point using the contribution margin method co Suppose Wind Co. wants to know how many must be sold to earn profit of $ 100,000. please calculate the no. of bikes they should produce to have this profit using either equation or contribution margin method
a) Calculation of Break even point using Equation method
Break even point is that point where there is no profit no loss. So, we can say that at break even point profit is zero.
Break even point in unit sales
Let Units= X
Sales= Variable expenses+Fixed expenses+Net income
$500X= $300X+80000+0
$200X= $80000
X= $80000/200= 400
Units= X= 400 units
Break even point in sales dollars
Let Total dollar sales= X
Variable expense= 60% of sales
= 60% of X= 0.6X
Sales= Variable expenses+Fixed expenses+Net income
X= 0.6X+80000+0
0.4X= $80000
X= $80000/0.4= $200000
Break even point in sales dollars= X= $200000
b) Calculation of Break even point using Contribution margin method
Break even point in units= Fixed costs/Contribution margin per unit
= $80000/200= 400 units
Break even point in sales dollars= Fixed costs/Contribution margin ratio
= $80000/40%= $200000
c) Bikes required to earn a profit of $100000= (Target profit+Fixed expenses)/Contribution margin per unit
= ($100000+80000)/200= 900 bikes
