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Using the Break-Even Analysis formulas below, solve the following problems. Be sure to show all of your work so you can get partial credit. The questions are shown below for convenience but you can download this Word document containing questionsand write your answers in the spaces provided.
Price x Volume = Fixed Cost + (Variable Cost per Unit x Volume)
Find the breakeven
Volume = 1000
Variable Cost per Unit = $5
Total Fixed Cost = $2500
Price = $25
(Variable Cost per Unit x Volume
) = $300
Total Fixed Cost = $5000
Total Fixed Cost
Price = $30
Variable Cost per Unit = $10
Volume = 10,000
Variable Cost per Unit
Price = $50
Fixed Cost = $25,000
Volume = 15,000
To help you better understand fixed and variable costs, briefly describe what happens to each of the following as volume increases: (Provide a generalization based on the concept rather than a specific number.)
Total Fixed Cost?
Total Variable Cost?
Fixed Costs per Unit?
Variable Cost per Unit?
Break-Even Volume = Fixed Costs / Contribution Margin per Unit
What is the Contribution Margin per Unit if:
Fixed Costs = $2500
Revenue per visit = $150
Variable Cost per visit = $75
What is the Break-Even Volume from the data above? Should the company provide the services if no other costs are added? Why or why not?
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