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Therefore the company has to achieve minimum sales of 1 43 million in order to break even at current mix of fixed and variable costs.
Break even sales revenue equation. Break even sales fixed costs sales sales variable costs break even sales 500 000 2 000 000 2 000 000 1 300 000 break even sales 1 428 571. Avc is the average variable cost per unit. The numerator of the equation is fixed cost which shall be incurred irrespective of whether a single unit is sold or not and hence that cost has to. It is very useful for manufacturing firms.
Break even sales formula fc asp avc where fc is the fixed cost. Break even sales fixed costs contribution margin percentage. For example abc international routinely incurs 100 000 of fixed expenses in each month. The formula of break even sales is derived by dividing the fixed cost with contribution margin percentage.
This means that the business reaches a break even sales level at 200 000 of sales per month. Fixed expenses contribution margin percentage break even sales.
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