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in second part of the report , how do you calculate the breakeven
and additional sales ?can you explain in detail the principal of breakeven, i dont understand the model answer
i understand the 5.5m which is the increased selling costs.and the 51.9m which is the new contribution …but then why do we divide it ?
105973 was the additional units to be sold …but this formula of
( fixed costs divide by contribution per unit ) i want to use this formula ,so how can we calculate the breakeven using this formula ?what was the first breakeven and the second breakeven , by deducting the answer of the two i should get 105973 units,,,,,,so how do we do it this way ?
The company’s contribution decreases by 5.5m under plan 1. Contribution per unit is 51.9.
To make the same profit as before, contribution of 5.5m has to be generated by selling more units. If each unit generates 51.9, then the number of additional units needed will br 5.5m/51.9 = 105,973.
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