Strategy

Step 2

Calculation of First Year Break Even Points																	Calculation of First Year Break Even Points
	Note		M1	M2	M3	M4	M5	M6	M7	M8	M9	M10	M11	M12	1st		1st	2nd	3rd	4th	1st
			Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Year		Qtr	Qtr	Qtr	Qtr	Year
Stores
Multiply by 200 carts
Total Carts
Multiply by Revenue per cart
Total Revenues	1		0	0	0	0	0	0	0	0	0	0	0	0	0		0	0	0	0	0
Variable Costs (VC)
Amortization (2 year S/L) Burcicki, Jim: While amortization in its normal sense would be considered a FC, it is considered a VC here because the number of carts is variable even though we are using an average of 200 carts as the basis.	2
Printing	3
Replacement (even distribution)	4
Cart Rental (10% Revenue)	5
Mktg. Sales & Comm.	6
Grocery Store Operations	7
Total VC			0	0	0	0	0	0	0	0	0	0	0	0	0		0	0	0	0	0
Contribution Margin (CM)			0	0	0	0	0	0	0	0	0	0	0	0	0		0	0	0	0	0
CM per Unit/Cart			ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!		ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!	ERROR:#DIV/0!
Fixed Costs (FC)
Accounting & Audit	8
Advertising (even distribution)	9
Auto Lease	10
Bank Charges	11
Entertainment & Promotion	12
Insurance	13
Legal	14
Management Fees	15
Office & Sundry	16
Public Relations	17
Rent	18
Salaries & Benefits	19
Stationary & Printing	20
Telephone & Faxc	21
Travel & Accommodation	22
Total FC			0	0	0	0	0	0	0	0	0	0	0	0	0		0	0	0	0	0
Total Expenses (VC + FC)			0	0	0	0	0	0	0	0	0	0	0	0	0		0	0	0	0	0
Net Operating Income			0	0	0	0	0	0	0	0	0	0	0	0	0		0	0	0	0	0
Break Even Point in terms of carts															ERROR:#DIV/0! Burcicki, Jim: The Formula Method - Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart)						ERROR:#DIV/0! Burcicki, Jim: The Formula Method - Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart)
Break Even Point in terms of stores															ERROR:#DIV/0! Burcicki, Jim: The Equation Method - Managerial Accounting, 15th ed., Page 201 Break Even = Q Unit CM = CM / Total # of Stores Profit = Unit CM x Q - Fixed Expense						Burcicki, Jim: The Formula Method - Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart)	ERROR:#DIV/0! Burcicki, Jim: The Equaion Method - Managerial Accounting, 15th ed., Page 201 Break Even = Q Unit CM = CM / Total # of Stores Profit = Unit CM x Q - Fixed Expense
Burcicki, Jim: Will cost 15k so I am assuming the expense is being accrued and therefore expensed in December as an adjusting entry.	Burcicki, Jim: The author expenses the 10k in January. However, it states that the 10k will be purchased during the first quarter - first three months - in sufficient quantities to last the entire year. This should be a prepaid and then expensed during the year. With no set amoutns, I assumed an even distribution throughout the year.	Burcicki, Jim: While amortization in its normal sense would be considered a FC, it is considered a VC here because the number of carts is variable even though we are using an average of 200 carts as the basis.															Burcicki, Jim: The Formula Method - Managerial Accounting, 15th ed., Page 201 BE (Carts) = Total FC / (CM per Unit/Cart)