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A Single Product Break Even Analysis Example BEP$ = F 1 V P Where BEPx = BEP$ BEPx F V P F P V = Break-even in dollars = Break-even in units = Fixed Costs = Variable Costs per Unit = Price per Unit (after all discounts) Example: A Dickie-Dee ice cream cart costs $12,000. Direct labour for the driver amounts to $1.20 per unit, and “Rocket” treats cost $0.80 per unit to prepare. The selling price of each “Rocket” treat is $3.50. What is the break even point? Break-even point in dollars: BEP$ = F 1 V P = Break-even point in units: BEPx = F P V A Multiple Product Break-Even Analysis Example F BEP$ = V 1 Pi Wi i Where W i = The percent of each product of total sales Example: The Dickie-Dee cart owner now will sell three types of frozen treats, “Rockets”, “Zipper-Bars”, and “Cherry Blasters”. Use the information below to calculate the break even point in dollars. Item Price (P) Cost (V) Rocket Zipper Cherry 3.50 3.25 3.60 2.00 1.50 2.10 V/P 1-(V/P) Annual Sales – Units 7,000 8,000 4,000 Annual Sales $ % of sales Weight W BEP$ = F V 1 Pi i Wi = (1-V/P) xW