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

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