Contribution Margin = Price per unit - Variable costs per unit
$57 - $8.30 = $48.66
Total fixed costs / Contribution Margin = Break even (quantity in units)
$7,124/$48.66 = 146/month
I HAVE SEVERAL REVENUE DRIVERS...
1) Calculate contribution margins for each of your revenue drivers. This is how your table with calculation may look like:
| Revenue driver 1 | Revenue driver 2 | Revenue driver 3 | Revenue driver 4 | |
| Price | $57.00 | $227.00 | $197.00 | $27.00 |
| Variable costs per unit | $8.30 | $12.50 | $4.00 | $4.00 |
| Contribution Margin = Price - Variable Costs per unit | $48.70 | $214.50 | $193.00 | $21.00 |
| Revenue driver 1 | Revenue driver 2 | Revenue driver 3 | Revenue driver 4 | |
| Price | $57.00 | $227.00 | $197.00 | $27.00 |
| Variable costs per unit | $8.30 | $12.50 | $4.00 | $4.00 |
| Contribution Margin = Price - Variable Costs per unit | $48.70 | $214.50 | $193.00 | $21.00 |
| Share in the expected sales (%) | 30% | 50% | 10% | 10% |
| Revenue driver 1 | Revenue driver 2 | Revenue driver 3 | Revenue driver 4 | |
| Price | $57.00 | $227.00 | $197.00 | $27.00 |
| Variable costs per unit | $8.30 | $12.50 | $4.00 | $4.00 |
| Contribution Margin = Price - Variable Costs per unit | $48.70 | $214.50 | $193.00 | $21.00 |
| Share in the expected sales (%) | 30% | 50% | 10% | 10% |
| Weighted Average Contribution Margin (WACM) | $14.61 | $107.25 | $19.30 | $2.10 |
| Revenue driver 1 | Revenue driver 2 | Revenue driver 3 | Revenue driver 4 | |
| Price | $57.00 | $227.00 | $197.00 | $27.00 |
| Variable costs per unit | $8.30 | $12.50 | $4.00 | $4.00 |
| Contribution Margin = Price - Variable Costs per unit | $48.70 | $214.50 | $193.00 | $21.00 |
| Share in the expected sales (%) | 30% | 50% | 10% | 10% |
| Weighted Average Contribution Margin (WACM) | $14.61 | $107.25 | $19.30 | $2.10 |
| Fixed costs | $85,488 | |||
| Weighted Average Break Even (WABE) | $85,488 / ($14.61+$107.25+$19.30+$2.10) = 597 bundles | |||
| Share in the expected sales (%) | 30% | 50% | 10% | 10% |
| Units per year to break even | 179 units | 299 units | 59.7 units | 59.7 units |
Hello Stephanie,
ReplyDeleteI believe your break-even calculations are clear, easy for follow and logical.