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) |
||||||||||||||||||||
| 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 |
|||||||||||||||||||
|
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) |