Break Even Analysis (Continued)

Suppose you wanted to start a company with Total Fixed Costs of $1000 / month.

& it had Total Variable costs of $50 / unit.

If you had a Markup Percentage of 100% ($50), how many units do you need to sell to break even?

Suppose you had a markup percentage of 50% ($25), how many units do you need to sell to break even?

Markup vs Margin

Markup the Price from the Cost of Goods Sold (Total Variable Costs)

Markup percentage is 50% from Total Variable Costs of $40? What is the sales price?

Price = Markup + Total Variable Costs

$60 = (50% x 40) + 40

$60 = $20 + 40

Margin is the Percentage of Profit from Sales Price.

Margin Percentage is 33.33% from $60.

jPrice x Margin Percentage = Profit (Markup)

$60 x 33.33% = $20.

What is the margin if you sell your product at $100, and it has total variable costs of $60.

What is the Margin Percentage?

Margin: $40 = $100 - $60.

Margin Percentage (Profit Percentage): Margin / Price = $40 / $100 = .4 = 40%

What is the markup if you sell your product at $100, and it has total variable costs of $60.

What is the Markup Percentage?

Markup: $40 = $100 - $60.

Markup Percentage: Markup / Costs = 40 / 60 = 2 / 3 = 66.67%