Break-even Analysis

Question

Non profiting organization employing physically and mentally challenged adults, prudes a single product selling for $25 per unit . It’s variable operating costs are $10, and its fixed operating costs are $2 million.

How do I calculate profit for 100,000 units and 200, 000 units?

How do I calculate the break even quantity/volume?

Answer 1

Profit:

($25x(100,000))-($10x(100,000))=(100,000x$15)= $1,500,000-$2,000,000=(-$500,000 profit, notice the negative, so no actual profit)

$15x200,000=$3,000,000-$2,000,000= $1million profit

To break even

$0 profit/loss= break even point

$0= $15(x)-2,000,000

$2,000,000/$15= 133,333.33 units to break even

Hope that helps!