Breakeven revenue
anniebabe
Registered Posts: 595 Epic contributor 🐘
I seem to have forgotten how to work out breakeven revenue - panic panic - exam monday.
please help.
please help.
0
Comments
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Hi Annie
is break-even not your Budgeted Units or Costs/Contribution Cost
Donna0 -
not the breakeven units formula - fixed costs over contribution. But the formula for breakeven revenue - thought it was fixed costs over profit volume ratio - but i seem to be doing something wrong - working on exam June 2007 task 2.2.0
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the amount of revenue needed to cover both fixed and variable costs so your business neither makes nor loses money
(Fixed Costs) / (1 - (Variable cost per unit/Selling Price per unit))
= Revenue to Break-even0 -
god my brain!, I have just printed off that paper, I will have a look at that the now0
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Hi Anne
Ok, I have worked out the following for 12,000 mile
SR - 120,000 (taken from task 2.1)
FC - 36,450 (taken from task 2.1)
Contribution - 97,200 (taken from task 2.1)
Contribution per mile - 8.10 (97,200/12,000)
Breakeven no of miles - 4500 (36450/8.10)
breakeven sales revenue - 45,000 (taken from task 2.1)
margin of safety in nos - 7500 (taken from task 2.1)
margin of safety in £ - 75000 (taken from task 2.1)
margin of safety % for 12,000 is 62.5 (7500/12,000 x 100)
Donna0 -
Hi Donna
I got stuck at the sales revenue - and still not sure about it tbh!0 -
thanks Marga - still not sure about it though tbh!0
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Hi annie
For 10,000 miles the sales revenue is £100,000. Divide the £100,000 by the 10,000 gives you a cost of £10 per mile. Take the £10 and times it by the 12,000 miles , giving you the £120,000 sales revenue
Donna0 -
its just the breakeven figure I am struggling with Donna - thought i had all this in the bag - but my brain has seized up.0
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i just realised the break even figure isn't provided from task 1, am not entirely sure on this either. I am just heading home now, will have a look at this when i get home and see if I can work out how they got the 45,0000
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gonna try to see if can work this out for u annie
is the selling price 10.00?0 -
Hi emma yeah the selling price is £100
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Is it.not your breakeven miles x by the selling price per mile.?0
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think the formula is fixed costs/selling price. thats what i've learned0
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think the formula is the breakeven in units x selling price. thats the forumula i've learned0
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yeh donna think thats right!0
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yep it is your breakeven units x selling price. I just looked at notes when I got in.
Donna0 -
I always thought that Breakeven Sales Revenue was Fixed costs divided by profit volume ratio0
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Hi Annie
I just done it based on the p/v ratio and got the following
36450/0.81* = 45,000
8.10/10
maybe it was a fluke i got the answer as 45,000 as well doing it my way! must remember that one as i totally forgot about the pv ratio formula
Donna0 -
think i am just getting in a flap with it all now - feel like ive forgotten everything.0
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Try to use theTotal fixed cost
tot PV ratio
The break even units x price formula assumes that there is only one product.
And there are times when you round up the break even units, so multiplying by a rounded up number won't necessarily give you the correct revenue.Total fixed cost
tot PV ratioSandy
sandy@sandyhood.com
www.sandyhood.com0 -
Sandy
I read somewhere (Osborne book maybe) that you can use breakeven units x selling price to check your answer. This correct?0
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