Concept introduction:
Break-even point is a point at which the total sales equal the total costs. In the same manner, break-even sales mean that the volume of sales, equates to the cost of the company. We can say that the sale done just to recover the costs incurred by the company is the break-even sales.
1) The national breakeven revenue in dollars using contribution margin ratio. And, if average trade leads to $1,000 in revenue for National, how many trades must be made to breakeven.
2) The dollar revenues needed to earn a monthly target profit of $12,600, using equation approach.
3) A graph showing cost profit analysis.
4) The new breakeven point in trades, when average revenue increases to $1,500 per trade.
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Horngren's Accounting (12th Edition)
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