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

Hi Annie
is breakeven 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

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 Breakeven0 
god my brain!, I have just printed off that paper, I will have a look at that the now0

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

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

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

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

Is it.not your breakeven miles x by the selling price per mile.?0

think the formula is fixed costs/selling price. thats what i've learned0

think the formula is the breakeven in units x selling price. thats the forumula i've learned0

yeh donna think thats right!0

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

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

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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