The Eagles sells stadium blankets that have been monogrammed with high school and university...


The Eagles sells stadium blankets that have been monogrammed with high school and university emblems. The blankets retail for $50 throughout the country to loyal alumni of over 2,100 schools. Their variable costs are 41% of sales; fixed costs are $118,000 per month. Assume that variable costs increase to 47% of the current sales price and fixed costs increase by $10,000 per month. If Sandhill were to raise its sales price by 11% to cover these new costs, what would be the annual breakeven point in sales dollars?

Break-even Point:

Breakeven Point is the point in which total contribution margin is equal to the company's total fixed cost. It is the point in which the company does not incur neither net income or net loss, the net profit balance is zero at this point. this can be computed by dividing the contribution margin divided by the total fixed cost. When the contribution margin ratio is used, break-even n dollars will be computed and when per unit contribution margin is used, it will result in a break-even point in units.

Answer and Explanation: 1

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Before the increase in selling price, variable cost ratio and fixed cost:

AccountPer UnitRatio
Selling Price50100%
Variable Cost20.5041%

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Applying Systems of Linear Equations to Breakeven Point: Steps & Example


Chapter 1 / Lesson 3

Breakeven points are the point of intersection between two linear functions. Explore the steps of how the system of linear equations uses breaking points, and view an example of the business application in determining revenue from cost.

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