Answer 1. BREAKEVEN POINT (UNITS)=. (FIXED EXPENSES/CON

Answer 1
BREAKEVEN POINT
(UNITS)=
(FIXED EXPENSES/CONTRBUTION
PER CHILD)
(AMOUNT IN $)
REVENUE (A) 640
LESS: VARIABLE
COSTS (B):
DESCRIPTION
RATE PER
CHILD($)
Lunch and snacks 130
Educational
supplies 75
Other supplies 35 240
CONTRIBUTION PER CHILD (A) - (B) 400
FIXED EXPENSES (AS GIVEN IN
QUESTION) 4800
BREAKEVEN POINT
=
(4800/4
00)
BREAKEVEN NUMBER OF CHILDREN 12
CHILDR
EN
DESCRIPTION:
1. The total variable cost is calculated by summing the various variable costs. Formula
used “=SUM (B7:B9)”
2. The contribution per child is calculated by deducting the total variable costs from the
revenues. Formula used “C4-C9”
3. The total fixed cost (as given in question) is then divided by the contribution per
child, to find the break even number of children. Formula used “C13/C11”

Answer 2
NUMBEROFCHILDREN REQUIRED (FIXEDEXPENSES+DESIREDPROFIT/CONTRBUTION PERCHILD)
NUMBEROFCHILDREN REQUIRED (4800+10800/400)
THEREFORENO OFCHILDREN REQUIREDEACHMONTH(4800+10800/400) 39.00 CHILDREN
DESCRIPTION:
1. The fixed cost and desired profit are added and divided by the contribution per child
to compute the number of children required by the entity to earn the desired profit.
Formula used “= (4800+10800)/400”