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Break even Analysis


Variable cost

2003

2004

2006

Years

COGS
Commisions

4,326,000
429,000

4,132,000
405,000

5,570,000
536,000

Total

4,755,000

4,537,000

6,106,000

Sales
Variable cost (-)
Contribution
Fixed costs (-)
Net

Fixed Cost

2003

2004

2006

Salaries
Advertisments
Adm. Expenses
Rent
Depreciation
Misc Expenses

2,021,000
254,000
418,000
420,000
84,000
53,000

2,081,000
250,000
425,000
420,000
84,000
93,000

3,215,000
257,000
435,000
840,000
142,000
122,000

No. of sale tickets

Total

3,250,000

3,353,000

5,011,000

Break Even point ( $ )


(Units * Average sales ticket)

Break Even point ( units )


(Fixed Cost/Contribution per unit)
Average Sales ticket

Margin of safety
(=) Sales - Break even sales

Years
No. of sale tickets

2006
7,500

Break Even point ( units )


(Fixed Cost/Contribution per unit)

8,161

Average Sales ticket

1,398

Break Even point ( $ )


(Units * Average sales ticket)

11,406,962

Sales commision = 0
So, Variable Cost = COGS
Years
Sales
Variable cost (-)
Contribution
Fixed costs (-)
Net

2006
10,711,000
5,570,000
5,141,000
5,011,000
130,000

Years
No. of sale tickets

2006
6,897

Break Even point ( units )


(Fixed Cost/Contribution per unit)

6,723

Average Sales ticket

1,553

Break Even point ( $ )

10,440,192

(Units * Average sales ticket)

Increase in Advertisement expense


Total Fixed Cost

200,000
2006

Salaries
Advertisments
Adm. Expenses
Rent
Depreciation
Misc Expenses

3,215,000
457,000
435,000
840,000
142,000
122,000

Total

5,211,000

Years

2006

Sales
Variable cost (-)
Contribution
Fixed costs (-)
Net Income

10,711,000
6,106,000
4,605,000
5,211,000
-606,000

Years
No. of sale tickets

2006
6,897

Break Even point ( units )

7,805

(Fixed Cost/Contribution per unit)


Average Sales ticket
Break Even point ( $ )
(Units * Average sales ticket)

1,553
12,120,572

Assuming - All details same in 2007 as was in 2006


YEARS
Sales
COGS
Gross Margin

2006
10,711,000
5,570,000
5,141,000

Expenses
Commissions
Salaries
Advertising
Admin Expense
Rent
Depreciation
Misc. Expenses

536,000
3,215,000
257,000
435,000
840,000
142,000
122,000

Total

5,547,000

2007

Net Income
(Gross Margin - Total Expenses)
Fixed Cost

5,011,000

Unit Contribution Margin

0.667682

CM ratio
Break Even Point (sales ticket)
( total fixed cost/unit contribution margin)
Break Even Point (in dollars)
(fixed cost/CM ratio)
New Avg. Sales ticket
Old Avg. Sales ticket
Percent increase in avg. sales of ticket to break even

-406,000

0.4299
7505
11655
1690
1553
8.8134

2003

2004

2006

8,583,000
4,755,000
3,828,000
3,250,000

8,102,000
4,537,000
3,565,000
3,353,000

10,711,000
6,106,000
4,605,000
5,011,000

578,000

212,000

-406,000

No. of sale tickets

5,341

5,316

6,897

Break Even point ( units )


(Fixed Cost/Contribution per unit)

4,535

5,000

7,505

Average Sales ticket

1,607

1,524

1,553

7,287,019

7,619,807

11,655,380

1,295,981

482,193

-944,380

Variable cost (-)


Contribution
Fixed costs (-)

Break Even point ( $ )


(Units * Average sales ticket)
Margin of safety
(=) Sales - Break even sales