|
Month
|
Meals Served (Service Volume)
|
Total Costs
|
|
July
|
3,600
|
$21,000.00
|
|
August
|
4,100
|
$22,000.00
|
|
September
|
4,300
|
$23,150.00
|
|
October
|
4,700
|
$24,500.00
|
|
November
|
4,800
|
$25,500.00
|
|
December
|
4,900
|
$26,200.00
|
The total contracted meals for the year is 33,000
The contracted cost per meal is 6.50
Step 1:Compute the difference inservice volume (number of meals served) between the high and the low time periods (months). Subtract the low time period from the high time period.
|
High Time Period Service Volume
|
Low Time Period Service Volume
|
Difference in Service Volume
|
| |
|
|
Step 2:Compute the difference incostsbetween the high and low time periods (months). Subtract the low time period from the high time period.
|
High Time Period Costs
|
Low Time Period Costs
|
Difference in Cost
|
| |
|
|
Step 3:Compute the variable cost per unit of service. Divide cost by service volume
|
Cost (Difference between high & low time periods - Step 2)
|
Service Volume(Difference between high & low time periods - Step 1)
|
Variable Cost Per Unit
|
| |
|
|
Step 4:Compute thetotal variable costs for the low time period. Multiply variable cost per unit by service for low time period.
|
Variable Cost Per Unit(answer from Step 3)
|
Service For
Low Time Period
|
Total Variable Cost
|
| |
|
|
Step 5:Compute total fixed costs for the low time period. Subtract total variable cost from low time period cost.
|
Low Time Period Cost
|
Total Variable Cost(answer from Step 4)
|
Total Fixed Cost
|
| |
|
|
Step 6:Compute the Break-Even Point using the BEP Formula PX = A + BX, where:
P = Cost Per Meal
X = What you are solving for
A = Total Fixed Costs (from Step 5)
B = Variable Cost Per Unit (from Step 3)
Show calculations below:
Step 7:Compute the BEP for the year by multiplying the answer from Step 6 by 12.
|
BEP (from Step 6)
|
Months in the Year
|
Annual BEP
|
| |
|
|
Step 8: Determine the number of meals by subtracting the BEP for the year (answer from Step 7) from the Total Contracted Meals (see scenario).
|
Total Contracted Meals
|
BEP
|
Number of Meals
|
| |
|
|
Step 9: Determine the Revenue using the number of meals (answer from Step 8) multipliedby the contracted cost per meal.
|
Number of Meals
|
Cost Per Meal
|
Revenue
|
| |
|
|
Step 10: Determine the Total Cost using the number of meals (answer from Step 8)multiplied by the variable cost (Step 3).
|
Number of Meals
|
Variable Cost
|
Total Cost
|
| |
|
|
Step 11:Subtract the Total Cost (Step 10) from the Revenue (Step 9) and this is your Profit
|
Revenue
|
Total Cost
|
Profit
|
| |