Breakeven Point. When you make a product, you need to know how many you need to make and sell to make money. This critical point is known as the Breakeven Point. It is where you have sold enough items to break even.
Variable Costs 75+55+25 = $155
Fixed Costs 24000 + 5000 + 75000 = $104,000
Total Income = selling price x number sold
Total Income = 200 x 5000
Total Costs = (variable cost per unit x number of units sold) + TFC
Total Costs = (155 x 5000) + 104,000
= 775,000 + 104,000
Profit or Loss ?
Because your income is higher than your total costs – you must have made a profit.
Profit / Loss = total income – total costs
= 1,000,000 – 879,000
The amount of money you make per unit - i.e. your profit per item
Marginal Income Per Unit = Selling Price per unit– Variable Cost per Unit
MIPU= 200 – 155
Number required to Break Even = Total Fixed Costs/ MIPU
B/E = 104000/45
=2311.11 – so 2312 Surfboards
Where the lines cross is the breakeven point
The number of items being made is x.
These are entered into your calculator as Y1 and Y2