[teeceecaligirl]

Sales (2,000 tables @ $100 per table) $ 1,000,000
Variable expenses 400,000
Fixed expenses 120,000

How to compute the contribution margin (CM)?
(sale price per table) $500-$200=500/300 $200
How many tables must be sold in order for my store to break even?
What dollar amount of sales of tables is necessary to break even?
The store might go out of business and I'm trying to help the older understand with the break even point maybe, but not sure if the calculation is corrected. Please help with an example step by step to get an clearer understanding.

[Perito]

Maybe I'm dense, but I'm confused. How can you sell 2,000 tables at $100 per table and only get $1,000,000? Why not $200,000 (2000 x 100 = 200,000). Maybe it's 20,000 tables?

This is what I think is happening. Your sales are $2,000,000 and you sold 20,000 tables @$100/table.

If variable expenses are $400,000, and you sold 20,000 tables, then you have a variable expense of $20 / table.

So, your profit before fixed expenses is $100/table - $20/table = $80/table.

Fixed expenses cannot be calculated on a per-table basis. To cover your fixed expenses (break even), you need 120,000/$80 = 1500 tables.

For 1500 tables @100 per table, you need to take in $150,000 in sales.

[sarnian]

Hello TC

Based on your data you always lose per table more than $ 100
As your amounts don't telly up, I adapt the selling price to a more realistic level.

Sales of 2000 tables @ $500 = $ 1000000
Variable expenses 400000
Fixed expenses 120000

Variable expenses are $ 400000 / 2000 = $ 200 per table
Fixed expenses are $ 120000
In this question the break-even point is where all costs are balanced by the amount of sales.

Take the amount of tables required to break-even = x

Sales amount = fixed expenses + variable expenses

x 500 = 120.000 + x 200
300 x = 120.000
So the break-even point is 400 tables.

400 tables at $ 500 = 200.000
Fixed expenses are 120000
Variable expenses are 400 . 200 = 80000

Using this type of calculation you can do the same for other selling prices of the tables.