In this exercise, you will work through two breakeven analysis problems to arrive at a breakeven point in dollars and units. In a slideshow presentation, you will show how you arrived at the breakeven point for each problem and will then expand on how you might have arrived at that place sooner (for example, by adjusting the cost of goods sold).

 

Breakeven Point = Fixed Costs / Gross Margin Percentage

 

Problem 1: Your retail store buys handbags for $250.00 each, marks them up, and then sells them for $420.00 each. Your monthly expenses (fixed costs) are $50,000.

 

Calculate the breakeven point in dollars and in units. How can you improve your situation and get to the breakeven point sooner?

 

Problem 2: Your luxury hotel has a total fixed cost of $100,000.00 per month. When a room is occupied, it attracts a variable cost for cleaning of $50.00. Your average rate-per-day per room is $1,000.00

 

Calculate the breakeven point in dollars and in occupied rooms per month. How can you improve your situation and get to the breakeven point sooner?