courses › Business Math

How many sales cover the fixed costs, and how much room you have above that.

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Builds on: Contribution Margin (not open yet)

skills · practice stats

From rounds of this course only: box, review and trial answers are left out. Once a skill has 40 tries, it compares your first 20 tries with your last 20.

• Break-even units par 15 s not tried yet

  worked example

  Fixed costs are $15,100 a month and each service contributes $385. How many whole services are needed to break even?

  Answer: 40

  1. Break-even = fixed ÷ contribution = $15,100 ÷ $385 ≈ 39.22; round up to 40.
  2. At 39, contribution is $15,015, $85 short of fixed costs.

• Break-even from price and cost par 20 s not tried yet

  worked example

  A product sells for $365 and has $215 of variable cost per unit. Fixed costs are $9,070 a month. How many whole units must it sell each month to break even?

  Answer: 61

  1. Contribution = $365 − $215 = $150 per unit.
  2. Break-even = $9,070 ÷ $150 ≈ 60.47; round up to 61 units.

• Break-even sales dollars par 17 s not tried yet

  worked example

  Fixed costs are $38,500 a month and the contribution margin ratio is 25%. What monthly sales revenue breaks even?

  Answer: $154,000.00

  1. Each sales dollar contributes $0.25, so revenue needed = $38,500 ÷ 0.25 = $154,000.
  2. Check: 25% of $154,000 is $38,500.

• Margin of safety par 16 s not tried yet

  worked example

  A business has 200 customers and breaks even at 116 customers. What percentage of its current customers could it lose before it reaches break-even?

  Answer: 42%

  1. Headroom ÷ current = (200 − 116) ÷ 200 = 84 ÷ 200 = 42%.
  2. Divide by current sales, not by the break-even point.

• Break-even with a sales mix par 30 s not tried yet

  worked example

  A bakery sells 3 loaves of bread for every 4 cakes. Each loaf of bread contributes $9 and each cake $2. Fixed costs are $10,500 a month. How many total items must it sell to break even if the mix holds?

  Answer: 2,100

  1. Group the mix into a bundle: 3 × $9 + 4 × $2 = $35 per 7 items.
  2. $10,500 ÷ $35 = 300 bundles = 300 × 7 = 2,100 items.

rest ladder

Win 3 of your last 4 rounds and the course rests. A win is 90% right, within 2× the round's par. Pass the review when it comes back and the next rest is longer.

1. 1 day
2. 3 days
3. 7 days
4. 14 days
5. 30 days
6. 60 days
7. mastered · every 90 days

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