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Is utilities and franchise fee included in contribution margin for dry cleaning business to calculate Break-even...

Is utilities and franchise fee included in contribution margin for dry cleaning business to calculate Break-even point

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Answer #1

Yes , BOTH cost should consider while the calculating BEP in Dry cleaning Business

The break even point is the production level where total revenues equals total expenses.

Formula OF BREAK EVEN POINT= Fixed Cost/contribution

Here contribution is = sales - variable cost

Utility cost include machine running Cost. which is depends on the Amount of cloth washing and use of machine. Such cost is part of variable cost .

While Franchise fees is fixed amount of expense which need to pay yearly or Monthly. Franchies fees is a Fixed expenses . It is not vary according to cloth quantity.

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