Breakpoint Even

docx

School

Southern Columbia Hs *

*We aren’t endorsed by this school

Course

MISC

Subject

Accounting

Date

Nov 24, 2024

Type

docx

Pages

1

Uploaded by trunks4u69420

Report
XYZ Home Health Care Agency is considering adding a new service. The anticipated charge per service is $150. The variable cost associated with providing this service is $50. Fixed costs are $2,000. What is the breakeven point for this new service? I rewrote the question here so I have a guideline. What we know from the problem stated above is that the revenue is at 150 per service. Revenue = 150 We know that the variable cost is 50 per service. Variable cost= 50 Therefore in order to figure out the Breakeven point we must take the contribution cost margin into effect as well that causes a formula to be formed. Contribution margin per service formula= Revenue- Variable cost. This equals to 150-50 which equals to 100 per service. Therefore the contribution margin= 100 One also knows the fixed costs of the service. Fixed cost= 2,000. Therefore in order to figure out the breakeven point we must take the Fixed cost divide by contribution margin per service. The numbers will be 2,000 divided by 100 equals 20 The breakeven point= 20 dollars per service.
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