[Anonymous]

I’m so frustrated with this concept? Does anyone have any tips on how to bring this altogether for me? In the interim, I’m going to try and find some Youtube videos on this topic. My studies are stalling right now. Ugh! I should’ve never let this exam lapse.

I'm tired of operating in fear and mediocrity. It's time to try. It's time to do. It's time to go.

[raj]

I was a bit worried about this as well. If you are using becker, just go thru the module again and write down all the Breakeven formulas. That's what I did and i tried to just understand them and do the examples provided in the text. That helped me understand the formulas so I did less memorization and just tried to analyze what the problem was asking.

[Anonymous]

I hope you were able to see my reply to you in the BEC study forum. Can you describe what/where you're having issues? The main key to break even analysis is Sales – VC, Variable costs are sales-driven, and what's left over after your variable costs are covered is used to cover your fixed costs, which are independent of sales (whether in units or dollars).

For example, say this year you had a company with 1M in maintenance contracts and you have 10 technicians to do the job. Next year, your sales folks did very well, and now have 10M in contracts and 80 technicians to do the job. The techs are your variable cost in this scenario. Let's say that each technician makes 60k per year. Your variable costs are 600k for year 1, and represent 60% of sales (600k / 1M). In year 2 however, your 80 techs cost 4.8M or 48% of sales. Now lets say that you're totally able to run all of this in year 2 with the same fixed costs as year 1, say 300k. Break even in year 1 is 900k in sales (600k + 300k), and the BE point for year 2 is 5.1M in sales (4.8M + 300k).

[Anonymous]

First off, THANK YOU, both for responding so quickly! Yes, I'm using Becker and will just go back and write down the formulas. @Boe, I didn't realize you had responded to my question. I'll go back and take it step by step; the explanation provided above is very helpful. Thanks, again. As of current, I understand the SP-VC=CM, I know how to get the CM ratio and breakeven in units and in dollars. I think it's when the question is presented in a different format (after tax, target cost, margin of safety, when I have to find the FC, etc) that I get confused.

I'm tired of operating in fear and mediocrity. It's time to try. It's time to do. It's time to go.

[Author]

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