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Breakeven

Your client, SmartClean, Inc., is a cleaning service for office and industrial locations. SmartClean has been in business for 5 years and has shown steady revenue growth each year. The owner originally started the business using a business loan. The owner has $10,000 remaining on the loan after steadily making payments and has an excellent personal and business credit history.

The owner wishes to expand the SmartClean business into three new territories, needs an infusion of capital, and is looking for $50,000 to make the expansion.

The expected fixed costs for the current business and expansion are $75,000. SmartClean's average charge per job is $250.00. The variable cost per job is $35.00.

Conduct breakeven analysis (based on given price and costs) in this spreadsheet .

1)Complete the table below.

2)Calculate the BEQ.

3)Referring to the table you completed in part 1), what is the minimum quantity (in buckets of 50 jobs) you recommend to the owner to cover the remaining $10,000 loan?

Variable Costs Fixed Costs Total Costs Profit / (Loss) Price BEQ Variable Fixed Costs Costs $35 $75,000 $250 Minimum Quantity 23 24 25 Quantity Total Revenue 26 0 27 50 28 100 29 150 30 200 31 250 32 300 33 350 34 400 35 450 36 500 37 550 38 600 39 650 40

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