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a University
UJ I% I% of the Valley of Mexico
LAUREATE INTERNATIONAL UNIVERSITIES

Identification data
Student's name Margarita Yaneth López Salas
Teacher's name José Antonio García Zambrano

Date 13/August/2020

Financial Accounting
Unit 3. Financial analysis
Activity 7. Break-even point exercise

1. Based on the materials reviewed, perform the break-even point exercise presented below:

The company Divierte y Aprende, S.A. de C.V., manufactures video game consoles and controllers
and has just launched a new product which is a console remote control, so it is necessary to
determine the sales so that the business does not lose or gain (break-even point). The business
margin is 38.50% and the following information is available, according to its monthly income
statement.

Sales price $25,000.00

Raw Materials $88,500.00
Labor $127,000.00
Manufacturing costs $54,000.00
Cost of packaging $33,750.00
Sales commission $17,000.00
Royalties $21,500.00
Fixed costs $96,870.00

Perform all calculations and operations in an Excel sheet and integrate the results in this document; you
can integrate the calculations from the Excel sheet at the end of this document or send both files (Excel
and Word) in the Blackboard platform.

1
 Variable unit cost formula

Total variable costs/units sold

$341,750.00 / 18 = $18,896.11

Sales price $25,000.00

Matreia prima $88,500.00 $88,500.00

Labor $127,000.00 $215,500.00

Manufacturing from $54,000.00 $269,500.00

costs
$303,250.00
Cost of packaging $33,750.00
$320,250.00

Sales by $17,000.00
commission $341,750.00 Sum of variable costs

Royalties $21,500.00

Fixed costs $96;870.00

2
 Universidad del
UVM Valle de México
LAUREATE INTERNATIONAL UNIVERSITIES

Total
revenue
=units
sold
times
Variable costs + $341,750.00 CV= Variable selling
cost per each price per
Fixed costs $96,870.00
CF unit X units sold CF + CV each unit
Total income. $438,620.00 Units sold Fixed Variable cost Total Total
0 cost968 - cost
- income
-
1 70 968 18,896.11 115,856. 2500 BRE
Total income / $438,620.00 2 70 968 37,972.22 11
134,842. 00 50000 POI
Fixed cost (FC) - Fixed 96.8 70 968 22
153,828.
Cost of sale $25,000.00 3 56,958.33 75000 600,000.
expenses 70 2500 70 968 33
172,814. 1000
Sales price per unit 4 75,944.44 00
=17.5
Variable cost per unit 0 19.4 5 70 968 M 94,930.5544 1 00 1250
500,000.
79 16 70
968 191,800.55
113,916 210,786. 00 1500
Units sold 18 Balance 00
341.750, 70 968 Tl132,902.77
.66 66
229,772. 00 1750
Variable cost (CV) 7 400,000.
This formula results in 17.5,0so438.6
Total revenues
it is not possible to sell half a remote
8 70 968
control. 77
4 248,758. 00 2000 00
20 70 88 00
Then weTotal
round it to 18,
revenue= Unitsthat would be our break-even point. 300,000.
00
sold X selling price per 968 170,874 267,744. 2250
unit 9 70 .99 99 00 200,000.
0.00
00
Fixed $96,870.00 10 968 189,861 286,731. 2500
1 2 3 4 5
Sales price
cost $25,000.00 70 968 .10 10
208,847 305,717. 00 2750
11 100,000.

12 70 968 .21 227,833 21324,703. 00 3000 00

Variable cost per unit. $18,986.11
Sales price 2500 13 70 968 .32 32
246,819 343,689. 00 3250
Balance. 00 18
Raw Materials 8850 14 70 968 .43 265,805 43
362,675. 00 3500
Variable costs
Labor 0 $341,750.00
1270 15 70 968 .54 284,791 54
381,661. 00 3750
00 5400 16 70 968 .65 65
303,777 400,647. 00 4000
Total Manufacturing
revenues. costs $438,620.00
Cost of packaging 0 3375 17 70 968 .76 322,763 76
419,633. 00 4250
Sales commission 0 1700 18 70 968 .87 341,749 87
438,619. 00 4500
Royalties 0 2150 19 70 968 .98 98
360,736 457,606. 00 4750
Fixed costs 0 9687 20 70 968 .09 3794,72 09
476,592. 00 5000
0 70 2.20 20 00

3
4
Variable point concept:
It is that point where sales equal total costs making profit zero.
In other words, where the company neither wins nor loses.
Formulas to calculate the break-even point:
QE= CF VE= QE* VV
VV-CVU