If only the Sea kayak is produced and sold, 160 units is the break-even point. If only the River kayak is produced and sold, 60 units is the break-even point. Which manager is correct? The answer is both might be correct. One manager at Kayaks-For-Fun believes the break-even point should be 60 units in total, and another manager believes the break-even point should be 160 units in total. Without going through a detailed derivation, this equation can be restated in a simplified manner for Kayaks-For-Fun, as follows: Profit = ( Unit CM for River × Quantity of River ) + ( Unit CM for Sea × Quantity of Sea ) − F Profit = $4 00 Q r + $15 0 Q s − $24, 000 Thus Profit = Total sales − Total variable costs − Total fixed costs Profit = − − F Key Equation S = Selling price per unit V = Variable cost per unit F = Total fixed costs Q = Quantity of units produced and sold CM = Contribution margin zip file containing this book to use offline, simply click here. You can browse or download additional books there. More information is available on this project's attribution page.įor more information on the source of this book, or why it is available for free, please see the project's home page. Additionally, per the publisher's request, their name has been removed in some passages. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Normally, the author and publisher would be credited here. This content was accessible as of December 29, 2012, and it was downloaded then by Andy Schmitz in an effort to preserve the availability of this book. See the license for more details, but that basically means you can share this book as long as you credit the author (but see below), don't make money from it, and do make it available to everyone else under the same terms. This book is licensed under a Creative Commons by-nc-sa 3.0 license.
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