Concept explainers
a)
To determine: The break-even point in dollars per month.
Introduction:
Break-even point (BEP):
The break-even point is measured in units or in sales term to identify the point in a business which is required to cover with the total costs. The total profit at break-even point is 0.
a)
Answer to Problem 26P
The break-even point in dollars per month is $7,584.83
Explanation of Solution
Given information:
Selling Price (P) | Variable Cost (VC) | Volume (V) | |
Drinks | 1.50 | 0.75 | 30,000 |
Meals | 10.00 | 5.00 | 10,000 |
Desserts | 2.50 | 1.00 | 10,000 |
Sandwiches | 6.25 | 3.25 | 20,000 |
Formula to calculate Revenue:
Calculation of Revenue:
The revenue is calculated by multiplying the selling price with volume.
Drinks:
Meals:
Desserts:
Lunch:
Formula to calculate total revenue:
Calculation of total revenue:
The total revenue is calculated by summing all the individual revenue.
Formula to calculate percent of total revenue:
Calculation of percent of total revenue:
The percent of total revenue is calculated by dividing the individual revenue with the total revenue.
Drinks:
Meals:
Desserts:
Sandwiches:
Formula to calculate total percent of total revenue:
Calculation of Total percent of total revenue:
The total of percent of total revenue is calculated by summing all the individual percent of total revenue.
Calculation of
The value is calculated by dividing the variable cost by selling price.
Drinks:
Meals:
Desserts:
Sandwiches:
Calculation of
The value is calculated by subtracting 1 with
Drinks:
Meals:
Desserts:
Sandwiches:
Calculation of
The value is calculated multiplying the percent of total revenue with the value of
Drinks:
Meals:
Desserts:
Sandwiches:
Formula to calculate total value of
Calculation of total value of
The value is calculated by summing all the individual values of
Formula to calculate break-even point (BEP) in dollars:
Calculation of Break-even point (BEP) in dollars:
The Break-even point is calculated by dividing the fixed cost with the value of
Hence, the Break-even point (BEP) in dollarsis$7,584.83.
b)
To determine: The break-even units per day if it is open for 30 days a month.
Introduction:
Break-even point (BEP):
The break-even point is measured in units or in sales term to identify the point in a business which is required to cover with the total costs. The total profit at break-even point is 0.
b)
Answer to Problem 26P
The break-even units per day if it is open for 30 days a month is 9 / day.
Explanation of Solution
Given information:
Selling Price (P) | Variable Cost (VC) | Volume (V) | |
Drinks | 1.50 | 0.75 | 30,000 |
Meals | 10.00 | 5.00 | 10,000 |
Desserts | 2.50 | 1.00 | 10,000 |
Sandwiches | 6.25 | 3.25 | 20,000 |
Formula to calculate Revenue:
Calculation of Revenue:
The revenue is calculated by multiplying the selling price with volume.
Drinks:
Meals:
Desserts:
Lunch:
Formula to calculate total revenue:
Calculation of total revenue:
The total revenue is calculated by summing all the individual revenue.
Formula to calculate percent of total revenue:
Calculation of percent of total revenue:
The percent of total revenue is calculated by dividing the individual revenue with the total revenue.
Drinks:
Meals:
Desserts:
Sandwiches:
Formula to calculate total percent of total revenue:
Calculation of Total percent of total revenue:
The total of percent of total revenue is calculated by summing all the individual percent of total revenue.
Calculation of
The value is calculated by dividing the variable cost by selling price.
Drinks:
Meals:
Desserts:
Sandwiches:
Calculation of
The value is calculated by subtracting 1 with
Drinks:
Meals:
Desserts:
Sandwiches:
Calculation of
The value is calculated multiplying the percent of total revenue with the value of
Drinks:
Meals:
Desserts:
Sandwiches:
Formula to calculate total value of
Calculation of total value of
The value is calculated by summing all the individual values of
Formula to calculate break-even point (BEP) in dollars:
Calculation of Break-even point (BEP) in dollars:
The Break-even point is calculated by dividing the fixed cost with the value of
The Break-even point (BEP) in dollars is $7,584.83.
Formula to calculate Dollar volume:
Calculation of dollar volume:
The dollar volume is calculated by multiplying percent of total revenue with the BEP in dollars.
Drinks:
Meals:
Desserts:
Lunch:
Formula to calculate BEP units per month:
Drinks:
Meals:
Desserts:
Sandwiches:
Formula to calculate BEP per day:
Drinks:
Meals:
Desserts:
Sandwiches:
Hence, the BEP unit per day is9 units.
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Chapter 7 Solutions
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