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Breakeven Analysis
book

Breakeven Analysis

by Michael E. Cafferky, Jon Wentworth
August 2014
Intermediate to advanced content levelIntermediate to advanced
172 pages
3h 14m
English
Business Expert Press
Content preview from Breakeven Analysis

CHAPTER 10

Changing Costs

Our friend Bob, with whom we are getting quite well acquainted by now, is experiencing rising costs for the appliances he sells. He is wondering how this change will affect his breakeven point. Table 10.1, Refrigerator Contribution Margin, represents a typical refrigerator sale for Bob.

Here is Bob’s breakeven point before the change in cost:

image

This translates into $1,250,000 sales ($1,000 per unit × 1,250 refrigerators) needed to break even.

Recently, the manufacturer notified Bob that his cost to purchase a refrigerator would go up from $650 to $700. Assume that local competition will not allow Bob to increase the selling ...

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Publisher Resources

ISBN: 9781631570919