help with break even please

valentino46

hi guys,

could enyone advise me how to calculate the break even point using sales revenue figure given for the product.

cheers

rob

vvpbl

Hello

As far as I know:

Sales Revenue-Variable Cost = Contribution
At Break even point,
Sales Revenue-Variable Cost = Fixed Cost
So, Contribution = Fixed Cost

But
Contribution = Contribution per sales revenue X Sales revenue

At Break even point:
Contribution = Contribution per sales revenue X Break even point sales revenue

So,
Contribution per sales revenue X Break even point sales revenue = Fixed cost

and again

Profit Volume ratio =( Contribution/ Sales revenue )X 100

So,

Break even point sales revenue = Fixed Cost/ PV Ratio



This is as per my understanding.

Regards

Lalita

valentino46

hi,

thanks for the response, i have divided the sales revenue figure by sellling price per unit which has given me the total number of units needed to be sold to make the given revenue figure, then i have deducted the fixed costs from the total sales revenue, and then multiplied the variable cost per unit by the amount units sold to achieve the sales revenue figure!!


oh dear im lost.

rob

jewels.p

Dont know if this helps but I use the acronyms quoted on here to try to remember Formulas. Breakeven in Revenue = Fixed Costs/ PV Ratio.

First of all calculate the PV Ratio by dividing the Contribution by the Sales Price.

Hope this helps

Julie

valentino46

hi julie,

i have used your calc and it seems to give the answer of 0. so i presume ive broke even.

cheers

rob