Clearance depot has total monthly costs of $8,500 when 2,500 units are produced and $13,500 when 5,000 units are produced. what is the estimated total monthly fixed cost?
Answers
Answer:
The debt snowball plan is a strategy to pay off
debts in order – one by one – by rolling your
payments over like a snowball from one debt to
the next. You can order your list of debts by
interest rate or balance – the choice is yours.
From a financial perspective, it's smart to pay off
your highest-rate bad debt first. After all, putting
$500 towards a $3,000 credit card bill with an
18% interest rate will save you far more than
paying off a $500 bill at 6%.2
Answer:
Calculating the breakeven point is a key financial analysis tool used by business owners. Once you know the fixed and variable costs for the product your business produces or a good approximation of them, you can use that information to calculate your company's breakeven point. Small business owners can use the calculation to determine how many product units they need to sell at a given price point to break even.
The Breakeven Point
A company's breakeven point is the point at which its sales exactly cover its expenses. To compute a company's breakeven point in sales volume, you need to know the values of three variables:
Fixed costs: Costs that are independent of sales volume, such as rent
Variable costs: Costs that are dependent on sales volume, such as the cost of manufacturing the product
Selling price of the product
How to Calculate Breakeven Point
Illustration by Melissa Ling. © The Balance, 2018
In order to calculate your company's breakeven point, use the following formula:
Fixed Costs ÷ (Price - Variable Costs) = Breakeven Point in Units
In other words, the breakeven point is equal to the total fixed costs divided by the difference between the unit price and variable costs. Note that in this formula, fixed costs are stated as a total of all overhead for the firm, whereas Price and Variable Costs are stated as per unit costs—the price for each product unit sold.