Question

Break Even Analysis

Instructions: Find the Break Even point (in units) using the following financial statement. Assume rent, insurance, and loan interest are fixed expenses. The other expenses are variable, including the cost of goods sold.

SAMPLE CELL PHONE COMPANY
PROFIT AND LOSS STATEMENT
	August 2015
Operating Revenue:
Product Sales	$12,000.00	$500*24 phones
Service Sales	$3,000.00	$125*24 service plans
Total Operating Revenue	$15,000.00
Operating Expenses:
Cost of Goods Sold	$7,000.00	$291.67*24 phones
Gross Profit	$8,000.00
Operating Expenses:
Rent	$1,500.00
Insurance	$250.00
Office Supplies	$150.00
Utilities	$100.00
Total Operating Expenses	$2,000.00
Operating Income	$6,000.00
Other Expenses:
Loan Interest	$500.00
Total Income before Taxes	$5,500.00

Answer 1