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Halp make sense of this BS?

1.2k views · started by La Vie Cruelle ·
#1
Halp make sense of this BS?
Stuck on this problem, info below:


A catering business has variable operating costs of $245,650 and fixed operating costs of $365,823. It must generate _?_ in sales in order to make a 10% profit. What is the breakeven point?

Page from book wrote:
To calculate the breakeven point it is necessary to know the variable rate and the contribution rate. The variable rate (the percentage of sales that variable costs represent) is found by dividing variable cost by sales. (example from a graph, too lazy to upload graph) Here, $402,375 divided by $925,000 finds a variable rate of 0.435. The contribution rate (the percentage of profit that the contribution margin represents) is calculated by subtracting the variable rate from 1 (or 100). Thus, 1 - 0.435 = 0.565. The breakeven point is then calculated by dividing the contribution rate into the total of fixed costs. In figured 7.3 (graph from earlier) this figure is calculated as $743,303. It is nor possible to evaluate furture catering reservations and forecast how much additional revenue must be booked or understand the value of current reservations in relationship to overall profitablity of the business.....etc etc etc.


Chart from book wrote:
Breakeven point:

Sales = fixed cost / contribution rate
Contribution rate = 1 - Variable Rate
Variable rate = Variable cost / Sales

Example:
sales = 925,000
Variable cost = 402,375
Fixed cost = 416,250
Variable rate = Variable cost/sales = 405,375/925,000 = .435
Contribution rate = 1 - Variable rate = 1 - 0.435 = 0.565

Breakeven point:

sales = fixed cost / contribution rate = 416,250/0.565 = 743,303



Halp make sense of this BS?
#2
The answer is obviously this: 42.
#4
Not helping D<
#5
Maybe if you move the x over to the equals and you square both sides you can do the cucuasion normary
#6
x=365823/(1-245650/x)
x(1-245650/x)=365823
x-245650x/x=365823
x-245650=365823
#7
Drakonid wrote:
x=365823/(1-245650/x)
x(1-245650/x)=365923
x-245650x/x=365923
x-245650=354923

Sales = fixed cost / contribution rate
Contribution rate = 1 - Variable Rate
Variable rate = Variable cost / Sales

It can't be 365823/(1-245650/x), because 245,650 is the Variable cost, not the Variable rate. I get the format of the equation, what's throwing me off is the sales and that percent. Q-Q
#8
Sales= x

variable cost=245650

Fixed cost=365823

variable rate= variable cost/sales=245650/x

Contribution rate = 1 - Variable Rate= 1-245650/x

sales=x= fixed cost / contribution rate=365823/(1-245650/x)

---------- Post added at 03:24 AM ---------- Previous post was at 03:12 AM ----------

Well, if I remember my Economy classes, profit=opportunity cost...
#9
Drakonid wrote:
Sales= x

variable cost=245650

Fixed cost=365823

variable rate= variable cost/sales=245650/x

Contribution rate = 1 - Variable Rate= 1-245650/x

sales=x= fixed cost / contribution rate=365823/(1-245650/x)

---------- Post added at 03:24 AM ---------- Previous post was at 03:12 AM ----------

Well, if I remember my Economy classes, profit=opportunity cost...

There's a way to calculate the target sales/profit so you wont have to use the variable of x. I just cant seem to wake myself up long enough to figure out how.
#10
When it refers to sales inside of;

Breakeven = Fixed Cost / Contribution Rate
Contribution Rate= 1 - Variable Rate
Variable Rate = Variable Cost / Sales

That should work right, where Sales = Last months net profit.
The problems is that the author forgets to mention that the sales variable inside of the variable rate
#11
:in love::in love:Drakonid u so smrt.