recommendation

break_even_point_analysis.xlsx

Sheet1

	Solution
a	Breakeven sales is calculated with the help of the following formula:
	Profits = 0 = Revenue - cost of goods sold - fixed costs
	0 = R - 0.5R - 63000 - 0.3R
	0.47 =	63000
	R =	134042.553191489
	So the break even is	134042.553191489
b	Dr Zang should accept the revised lease agreement.
		13333 + 3% lease	1000 + 12.5% lease
	Revenues	150000	150000
	Cost of goods sold	75000	75000
	Fixed rent	13333	1000
	Lease fees as % sales	4500	18750
	Interest on bank loan	11667	10500
	Other costs	38000	38000
	Profit	7500	6750
	With the fluctuation on p[rofits, if revenue is between 80000 to 220000
		13333 + 3% lease		1000 + 12.5% lease
	Revenue
	Revenues	80000	220000	80000	220000
	Cost of goods sold	40000	110000	40000	110000
	Fixed rent	13333	13333	1000	1000
	Lease fees as % sales	2400	6600	10000	27500
	Interest on bank loan	11667	11667	10500	10500
	Other costs	38000	38000	38000	38000
	Profit	-25400	40400	-19500	33000