CVP Analysis - BEP
Understanding the effects of operating leverage High Tech, Inc., and Old Time Co compete within the same industry and had the following operating results in 2008:
|
|
High Tech
|
Old Time Co.
|
|
Sales........................................
|
$2,100,000
|
$2,100,000
|
|
Variable expenses.....................
|
420,000
|
1,260,000
|
|
Contribution Margin.........
|
$1,680,000
|
$840,000
|
|
Fixed expenses..................
|
1,470,000
|
630,000
|
|
Operating income..................
|
$210,000
|
$210,000
|
Required:
Calculate the break-even point for each firm in terms of revenue
|
|
High Tech
|
Old Time Co.
|
|
Sales........................................
|
|
100%
|
|
100%
|
|
Variable expenses.....................
|
|
|
|
|
|
Contribution Margin.........
|
|
|
|
|
|
Fixed expenses..................
|
|
|
|
|
|
Operating income..................
|
|
|
|
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