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Break-Even Analysis

Smithson Cutting's break-even point is 2,000 units, which equals $1,500 in sales revenue. As a prospective owner of the Red Rose club, the break-even point in dollars per month is $7,600. The expected number of meals each day if open 30 days per month is 8.58 meals per day.

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Fryda Garcia
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85 views3 pages

Break-Even Analysis

Smithson Cutting's break-even point is 2,000 units, which equals $1,500 in sales revenue. As a prospective owner of the Red Rose club, the break-even point in dollars per month is $7,600. The expected number of meals each day if open 30 days per month is 8.58 meals per day.

Uploaded by

Fryda Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Administración de la producción

Problemas. Break-Even Analysis

Break-Even Analysis
Administración de la producción
Ingeniería industrial 7mo
Por: Fryda García Delgadillo
Administración de la producción
Problemas. Break-Even Analysis

S17. Smithson Cutting is opening a new line of scissors for supermarket distribution. It
estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. Selling
price is expected
to average $0.75 per unit.
a) What is Smithson’s break-even point in units?
b) b) What is the break-even point in dollars?

500
𝐵𝑟𝑒𝑎𝑘 − 𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡 𝑖𝑛 𝑢𝑛𝑖𝑡𝑠 = 2,000.00 𝑢𝑛𝑖𝑡𝑠
. 75 − .50

𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡 𝑖𝑛 𝑑𝑜𝑙𝑙𝑎𝑟𝑠 2,000.00(. 75) = $1,500 𝑑𝑜𝑙𝑙𝑎𝑟𝑠


Administración de la producción
Problemas. Break-Even Analysis

S.26 As a prospective owner of a club known as the Red Rose, you are interested in
determining the volume of sales dollars necessary for the coming year to reach the
break-even point. You have decided to break down the sales for the club into four
categories, the first category being beer. Your estimate of the beer sales is that 30,000
drinks will be served. The selling price for each unit will average $1.50; the cost is $.75.
The second major category is meals, which you expect to be 10,000 units with an
average price of $10.00 and a cost of $5.00. The third major cat- egory is desserts and
wine, of which you also expect to sell 10,000 units, but with an average price of $2.50
per unit sold and a cost of $1.00 per unit. The final category is lunches and inexpensive
sandwiches, which you expect to total 20,000 units at an average price of $6.25 with a
food cost of $3.25. Your fixed cost (i.e., rent, utilities, and so on) is $1,800 per month
plus $2,000 per month for entertainment.

a) What is your break-even point in dollars per month?

Anual
Estimated Cost per unit Price per unit %c
Category v/p Contribution forecasted % of sales
sales (v) (p) ontribution
sales $
Beer 30,000.00 $ 0.75 $ 1.50 $ 0.50 $ 0.50 $ 45,000.00 15.2542% 8%
Meals 10,000.00 $ 5.00 $ 10.00 $ 0.50 $ 0.50 $ 100,000.00 33.8983% 17%
Desearts and
10,000.00 $ 1.00 $ 2.50 $ 0.40 $ 0.60 $ 25,000.00 8.4746% 5%
wine
Lunches 20,000.00 $ 3.25 $ 6.25 $ 0.52 $ 0.48 $ 125,000.00 42.3729% 20%
$ 295,000.00 100% 50%

Fixed Cost: $ 1,800.00


𝑭
𝑩𝑬𝑷$ =
𝑽𝒊
∑ [𝟏 − (𝑷𝒊) ∗ (𝑾𝒊)]
Entertainment
$ 2,000.00
cost per
month $𝟑, 𝟖𝟎𝟎 ∗ 𝟏
Total Cost per = $𝟕, 𝟔𝟎𝟎. 𝟎𝟎
$ 3,800.00 . 𝟓𝟎
month

b) What is the expected number of meals each day if you are open
30 days a month?

Anual
Estimated Cost per unit Price per unit
Category v/p Contribution forecasted % of sales %contribution
sales (v) (p)
sales $
Meals 10,000.00 $ 5.00 $ 10.00 $ 0.50 $ 0.50 $ 100,000.00 33.8983% 17%

Contribution in $ to break-even per month = $𝟕, 𝟔𝟎𝟎 ∗ 𝟑𝟑. 𝟖𝟗% = $𝟐, 𝟓𝟕𝟔. 𝟐𝟕
$2,576.27
Number of meals to be sold each month $10.00
= 𝟐𝟓𝟕. 𝟔𝟐 meals per month
257.62
Number of meals sold each day = 𝟖. 𝟓𝟖 meals per day
30

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