Breakeven Analysis: The Definitive Guide to by Michael Cafferky

By Michael Cafferky

This moment version maintains with the profitable entire number of cost-volume-pro t purposes. even if you are a enterprise expert, entrepreneur, enterprise professor, or scholar, you'll bene t from this one cease how-to ebook of formulation, reasons, and examples. This new version bargains quite a lot of subject matters, from calculating uncomplicated breakeven, to facing a number of items, combined expenses, altering expenses, and altering costs. Michael E. Cafferky is the Ruth McKee Chair for Entrepreneurship and company Ethics at Southern Adventist University's college of industrial and administration. In an addition to a doctoral measure in enterprise from Anderson collage Falls college of commercial he additionally holds masters levels in public healthiness and faith. the writer of 8 books, Cafferky is a member of the Academy of administration and the Christian company college organization. He has bought Southern's President's Award for Excellence in Scholarship and the nationwide Sharon Johnson Award from the Christian company college organization

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Restaurants that are in the middle of the industry in terms of average check per customer are getting profits squeezed as competitive rivalry increases in the market segments below and above them. Another economic dimension that adds to the rationale for monitoring breakeven in this particular industry is that even in a strong economy the overall growth rate of demand is low. Competition for the restaurant dollar can be intense in some markets. Fixed costs for a restaurant include marketing expenses, manager’s salary and benefits, general administrative expenses, telephone, Internet, cable TV, interest, licenses, bank charges, utilities, repairs, insurance, Cost of Goods Sold Method 23 occupancy costs such as rent, maintenance, janitorial services, depreciation, and other operating expenses.

5 Units to Be Sold Each Week. While mathematically correct, our solution for the weekly sales target presents a problem. Customers generally buy complete products, not fractional portions of products. To resolve this problem, simply round any fractional unit up to the next higher whole unit. Our sales target per week would be 138 units. 32 CM Ratio ($8 ÷ $25) $1,787,500 to be Sold Annually or 71,500 Units Sold Annually × $25 Selling Price per Unit = $1,787,500 Annual Sales. Alternatively, management might express its profit objective as an amount per unit of sales, a variable target profit.

While mathematically correct, our solution for the weekly sales target presents a problem. Customers generally buy complete products, not fractional portions of products. To resolve this problem, simply round any fractional unit up to the next higher whole unit. Our sales target per week would be 138 units. 32 CM Ratio ($8 ÷ $25) $1,787,500 to be Sold Annually or 71,500 Units Sold Annually × $25 Selling Price per Unit = $1,787,500 Annual Sales. Alternatively, management might express its profit objective as an amount per unit of sales, a variable target profit.

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