Question: A break - even analysis is a financial tool that helps businesses to determine the level of sales needed to cover all of their expenses
A breakeven analysis is a financial tool that helps businesses to determine the level of sales needed to cover all of their expenses and achieve a zero profit. The analysis is based on the relationship between fixed costs, variable costs, and revenue. Fixed costs are costs that remain constant regardless of the level of production, such as rent, salaries, and utilities. Variable costs are costs that vary depending on the level of production, such as the cost of materials, labor, and shipping. Revenue is the total amount of money earned from sales. To perform a breakeven analysis for a tshirt business, we need to identify the fixed costs, variable costs, and revenue associated with producing and selling tshirts.
Fixed Costs:
Rent for the production facility: $ per month
Salaries for employees: $ per month
Utilities and other expenses: $ per month
Total Fixed Costs: $ per month
Variable Costs:
Cost of materials: $ per tshirt
Labor costs: $ per tshirt
Shipping costs: $ per tshirt
Total Variable Costs: $ per tshirt
Revenue: Selling price per tshirt: $
With these values, calculate the breakeven point for the tshirt business.
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