Finamcial Management

Example 2

Number of customers per day that are needed for a break-even point There may be
hundreds of items, all at different prices. This example simply assumes, for
illustration purposes, that the average per unit is $3.00 in order that you can
determine an approximate number of sales necessary for BEP.

If the average unit selling price is $3.00

The average customer purchases two times per week $6.00

There are 4.3 weeks/month therefore, the average customer $25.80

sales/month = 4.3 x $6.00 =

BEP = FC/GM (per month) (BEP means break-even point) $5,917.87

Consequently, the customers needed for a break-even point are: 7.6 customers

$5,917.87/$25.80 = $230 x 12 month = $2,760 per year/365 days= per day

We rounded off the above figures for simplicity. In addition, the example is typical
of a business that sells products
rather than a fee-for-service
business. In a fee-for-service
business, the GM percentage
would be much higher, perhaps 60% or more and the necessary sales would then
drop significantly.

For example

$14,700 (expenses)/.60 (GM) = $24,500 (sales)