Break-Even Analysis & Business Plan

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You are considering the start of a small  business that sells generator gaskets.   According to your market research, you can sell each gasket for  $12.  Your fixed costs for the business  are estimated at $35,000 and you estimate your variable costs to be $6 per  gasket.

Required:

  1. How many units will you have to sell to break  even in the business? Calculate the breakeven point in units, and then in  dollars.
  2. In order to make the business a worthwhile  activity, you require a $20,000 profit.   How many units would you have to sell to make this venture worthwhile?
  3. Explain how breakeven analysis can be useful to  the person starting a small business and/or to an existing small business.

 

 

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