[suzieemac]

Ok, I know I should be able to figure this out but my mind is beyond fried so instead of growing more frustrated I figured I’d ask…

I’m looking at the Ninja example for CVP breakeven analysis: How much must be sold to realize a profit of 15% of sales.

Here is the information:

SP: $6 / unit
VC: $2 / unit
FC: $37,500

Question: How many units must be sold to realize a profit before income taxes of 15% of sales.

Breakeven sales in $= FC + 15%(S) / CM Ratio

= 37,500 + .15(s) / (6-2)/6
= 37,500 + .15(s) / .667

For some reason I cannot get past this point. Its basic algebra, solve for S. but can someone please help me? I can’t seem to figure out if I’ve done a step wrong, I mean I know I sometimes forget how to do algebra and I just need a swift kick in the…. lol.

The answer is 72,580.

Thank you in advance.

AUD - 8/12/16
REG - 10/7/16
BEC - 11/18/16
FAR - TBD

#300before30 - Pass the CPA exam before my 30th Birthday.

[Sandeepp]

Hi you have the correct approach just convert the breakeven sales in the same variable for this example I would call break even selling units as Y

(6-2)Y= 37500+ 0.15(6Y)

4Y- 0.9Y = 37500
3.1Y = 37500
Y = 12096.77

SO your breakeven Sales would be 12096.7 X $6 = $72580

Hope this helps 🙂

[suzieemac]

Yes, that did help. Thank you!!!

AUD - 8/12/16
REG - 10/7/16
BEC - 11/18/16
FAR - TBD

#300before30 - Pass the CPA exam before my 30th Birthday.

[Author]

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