Riley is interested in buying a local coffee shop and wants to determine its profitability potential. To do so, his first step is to calculate the break-even point. This will tell Riley at what level of sales he will start to make a profit. The current business owner provided the following information: income statement total per unit Units 44,000 1 Sales $220,000 $5.00 Cost of Sales(variable expenses) 88,000 2.00 Gross Margin 132,000 3.00 Operating Costs(fixed expneses) 125,500 2.85 Net Profit 6,500 15 Calculate break-even based on units. Using the information from the income statement provided, calculate number of units which must be sold to break-even. Fixed Costs/ (Sales price per unit – Variable costs per unit) = Break Even in Units
Riley is interested in buying a local coffee shop and wants to determine its profitability potential. To do so, his first step is to calculate the break-even point. This will tell Riley at what level of sales he will start to make a profit. The current business owner provided the following information:
income statement
total per unit
Units 44,000 1
Sales $220,000 $5.00
Cost of Sales(variable expenses) 88,000 2.00
Gross Margin 132,000 3.00
Operating Costs(fixed expneses) 125,500 2.85
Net Profit 6,500 15
Calculate break-even based on units. Using the information from the income statement provided, calculate number of units which must be sold to break-even.
Fixed Costs/ (Sales price per unit – Variable costs per unit) = Break Even in Units
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