Step 2
Calculation of First Year Break Even Points | Calculation of First Year Break Even Points | |||||||||||||||||||||
Note | M1 | M2 | M3 | M4 | M5 | M6 | M7 | M8 | M9 | M10 | M11 | M12 | 1st | 1st | 2nd | 3rd | 4th | 1st | ||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Year | Qtr | Qtr | Qtr | Qtr | Year | |||||
Stores | ||||||||||||||||||||||
Multiply by 200 carts | ||||||||||||||||||||||
Total Carts | ||||||||||||||||||||||
Multiply by Revenue per cart | ||||||||||||||||||||||
Total Revenues | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||
Variable Costs (VC) | ||||||||||||||||||||||
Amortization (2 year S/L) Burcicki, Jim: While amortization in its normal sense would be considered a FC, it is considered a VC here because the number of carts is variable even though we are using an average of 200 carts as the basis. |
2 | |||||||||||||||||||||
Printing | 3 | |||||||||||||||||||||
Replacement (even distribution) | 4 | |||||||||||||||||||||
Cart Rental (10% Revenue) | 5 | |||||||||||||||||||||
Mktg. Sales & Comm. | 6 | |||||||||||||||||||||
Grocery Store Operations | 7 | |||||||||||||||||||||
Total VC | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
Contribution Margin (CM) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
CM per Unit/Cart | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||
Fixed Costs (FC) | ||||||||||||||||||||||
Accounting & Audit | 8 | |||||||||||||||||||||
Advertising (even distribution) | 9 | |||||||||||||||||||||
Auto Lease | 10 | |||||||||||||||||||||
Bank Charges | 11 | |||||||||||||||||||||
Entertainment & Promotion | 12 | |||||||||||||||||||||
Insurance | 13 | |||||||||||||||||||||
Legal | 14 | |||||||||||||||||||||
Management Fees | 15 | |||||||||||||||||||||
Office & Sundry | 16 | |||||||||||||||||||||
Public Relations | 17 | |||||||||||||||||||||
Rent | 18 | |||||||||||||||||||||
Salaries & Benefits | 19 | |||||||||||||||||||||
Stationary & Printing | 20 | |||||||||||||||||||||
Telephone & Faxc | 21 | |||||||||||||||||||||
Travel & Accommodation | 22 | |||||||||||||||||||||
Total FC | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
Total Expenses (VC + FC) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
Net Operating Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
Break Even Point in terms of carts | ERROR:#DIV/0! Burcicki, Jim: The Formula Method – Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart) |
ERROR:#DIV/0! Burcicki, Jim: The Formula Method – Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart) |
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Break Even Point in terms of stores | ERROR:#DIV/0! Burcicki, Jim: The Equation Method – Managerial Accounting, 15th ed., Page 201 Break Even = Q Unit CM = CM / Total # of Stores Profit = Unit CM x Q – Fixed Expense |
Burcicki, Jim: The Formula Method – Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart) |
ERROR:#DIV/0! Burcicki, Jim: The Equaion Method – Managerial Accounting, 15th ed., Page 201 Break Even = Q Unit CM = CM / Total # of Stores Profit = Unit CM x Q – Fixed Expense |
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Burcicki, Jim: Will cost 15k so I am assuming the expense is being accrued and therefore expensed in December as an adjusting entry. |
Burcicki, Jim: The author expenses the 10k in January. However, it states that the 10k will be purchased during the first quarter – first three months – in sufficient quantities to last the entire year. This should be a prepaid and then expensed during the year. With no set amoutns, I assumed an even distribution throughout the year. |
Burcicki, Jim: While amortization in its normal sense would be considered a FC, it is considered a VC here because the number of carts is variable even though we are using an average of 200 carts as the basis. |
Burcicki, Jim: The Formula Method – Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart) |