Make a break even analysis

Question

Suppose you own and manage a rice-retail store and you are selling at least 5 different kinds of rice. Make a break-even analysis on:

a. at what price should you sell your product to break even?

b. at what price should you sell your product to earn your desired income while remaining competitive

to other stores?

Notes:

The break-even analysis is on monthly basis.

The kinds and prices of rice you're selling at your store is left at your discretion. Just make it sure that

your prices are reasonable.

Research on average monthly buyer on your own town.

Answer 1

a) The price you sell at to break-even, is the price at which your monthly operating costs are covered from sales with zero profitability for a Fixed time. The Fixed time is the total time or payback period when initial investment costs and/or sunk costs are repaid. When the payback period is completed then remaining monthly operating costs minus revenues equals potential profits.

b) The price at which to sell your product for profitability is based on 1) some value x higher than the break even price, and 2) Furthermore, the profitability price x is based upon x being below the highest market price found. If quality is proved true then price x may be possible to be the highest competitive price.