Sample Essay

The contribution margin per unit is calculated by deducting the variable cost per unit from the revenue per unit and the breakeven point is calculated by dividing total fixed costs by contribution margin per unit (Hilton, 2005).

Contribution Margin = Revenue per ITC – Variable Cost per ITC

Contribution Margin = 1049.35 – 923.43

Contribution Margin = $125.92

Breakeven point = Total Fixed Costs / Contribution margin per unit

Breakeven point = 42,763,200 / 125.92

Breakeven point = 339606

This means in order to break even the company needs to sell 339606 ITC’s to its representatives. The company can also increase its selling price or decrease its costs to lower the breakeven point. It should be considered that the breakeven point has been considered taking several assumptions based on the actual data given and if actual data is available and used, it may yield differing results.

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