Environmentally Friendly Bike Company produces e-bikes. They have fixed costs for renting their factory of $8,000 a month, a fixed cost for utilities of $4,000 a month, and fixed costs for employee benefits of $4000. The selling price per e-bike is $2,000. The variable cost for materials per e-bike is $400 and the variable labor costs are $200 per bike. 

Perform a break-even analysis to tell me how many e-bikes (units) per month does the company have to produce and sell to reach the break-even point? 

What is the break-even point in sales dollars? Also, write a paragraph on when this type of analysis is applicable with examples. Be sure all your calculations are included.

Answer rating: 100% (QA)

To perform a breakeven analysis we need to calculate the total fixed costs and the contribution margin per unit Total fixed costs 8000 rent 4000 utilities 4000 employee benefits 16000 Contribution mar... View the full answer