Question

Please complete question 1-5 below. Please show all of your work to receive credit.

Breakeven Analysis:

Brandon's home health care agency is considering a new product with a fixed cost of $2,000, a charge per unit of $150, and a variable cost of $100.

1. Calculate the break-even point in quantity.

2. Calculate the contribution margin in dollars.

3. Calculate the contribution margin as a percent.

4. Calculate the breakeven point in dollars.

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5. The breakeven point occurs where:

	A.	total variable costs and total revenue intersect
	B.	total revenue outpaces total avoidable fixed costs
	C.	total costs and total revenue intersect
	D.	total fixed costs and total revenue intersect
	E.	total profit margin and total costs intersect

Answer 1

here sales price per unit is 150$

Variable cost is 100$ and fixed cost is 2000$

1) Break even quantity

Break even point in quantity = Fixed cost/Contribution per unit

=2000/(150-100)

=2000/50

=40 units

2) Contribution margin in dollar = sales price per unit less variable cost

=150-100

=$50

3) Contribution margin in% = Contribution per unit/Sales per unit

=50/150

=33.33%

4) Break even point in $ = Beak evern quantity* sales price

=40 units*150

=6000$

5) The break even point occurs where total costs and total revenue intersect

Ans C) total costs and total revenue intersect