FNCE 3001 Week 8 Break-Even Analysis Example

Financial Management Walden University Free custom sample in 24 to 48h

This FNCE 3001 Week 8 break-even analysis example asks how many ski tunes a sporting goods chain's in-store service must sell in a season to cover the costs it has already committed to. Walden FNCE 3001 grades the cost classification beneath the calculation, so the sample leads with a table that sorts wax, piece-rate labor, a machine lease and a supervisor's salary into variable and fixed, and excludes an $18,000 rent share the decision cannot change. Contribution margin is $31 a tune, or 68.9 percent; break-even is 2,000 tunes or $90,000; a $25,000 profit needs 2,807 tunes. Against last season's 2,900, the margin of safety is 900 tunes, or 31 percent. A closing section tests that cushion against snow risk and weighs monthly machine leases and a $49 price. Brigham and Houston, Ross and colleagues and Garrison and colleagues guide this BS in Business Administration analysis.

CourseFNCE 3001 Financial Management
WeekWeek 8
Paper typeBreak-even analysis
LengthAbout 780 words, 5 pages
FormatAPA 7 student paper
SchoolWalden University
ProgramBS in Business Administration
UpdatedOctober 2026

Free sample paper for FNCE 3001 Week 8

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How Many Ski Tunes Must Juniper Peak's In-Store Service Sell to Cover Its Season's Fixed Costs? Cost Classification, Contribution Margin, Break-Even Volume and a 31 Percent Margin of Safety

Student Name

Walden University

FNCE 3001: Financial Management

Instructor Name

Month Day, Year

What this page is doingThe title states the question and lists the analysis in order, ending with the figure that turns the calculation into a judgment.
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How Many Ski Tunes Must Juniper Peak's In-Store Service Sell to Cover Its Season's Fixed Costs? Cost Classification, Contribution Margin, Break-Even Volume and a 31 Percent Margin of Safety

The Question

Juniper Peak Sports, whose fourteen composite stores sell ski and summer gear, added a ski and snowboard tuning service at its three Denver-area stores two seasons ago. Each tune costs the customer $45. Management wants to know how many tunes the service must sell in a season to cover its fixed costs, how far current volume sits above that point and how many tunes it would take to earn $25,000. Last season the service sold 2,900 tunes. All figures are for one November to April season.

What this page is doingThe analysis states the decision first, so every number has a use.
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Classifying the Costs

Two items needed judgment. The technician is paid entirely by the tune, so labor is variable here; if the company paid technicians an hourly wage regardless of volume, labor would move into fixed costs and the break-even point would rise. The share of store rent is excluded because the decision is whether the service pays for itself, and the store would pay the same rent without it. Including an allocated cost that the decision cannot change would overstate the break-even point (Brigham & Houston, 2022). Total variable cost is therefore $14 per tune, and total fixed cost is $62,000 a season.

Table 1

Ski Tuning Service Costs for One Season

Cost itemAmountClassificationReason |
Wax, edge stones and base repair material$5.00 per tuneVariableUsed up on every tune |
Technician piece rate$9.00 per tuneVariablePaid per tune completed |
Lease of two tuning machines$30,000 per seasonFixedOwed whether or not tunes are sold |
Service supervisor's base salary$32,000 per seasonFixedPaid for the season regardless of volume |
Share of store rent$18,000 per seasonExcludedThe space would be rented anyway; closing the service saves none of it |

Composite company. Figures for one season.

What this page is doingCost classification comes before the formula, since a misclassified cost changes every result that follows.
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Contribution Margin

Contribution margin per unit = price − variable cost per unit = $45 − $14 = $31.

Contribution margin ratio = $31 / $45 = 68.9 percent.

Every tune sold puts $31 toward the season's fixed costs; after those are met, the $31 is profit. Put another way, about 69 cents of every sales dollar is available to cover fixed costs.

Break-Even Volume

Break-even in units = fixed costs / contribution margin per unit = $62,000 / $31 = 2,000 tunes.

Break-even in sales dollars = fixed costs / contribution margin ratio = $62,000 / 0.689 = $90,000, which is the same as 2,000 tunes x $45.

The service must sell 2,000 tunes a season, about 77 a week across three stores over a 26-week season, before it earns anything. Had the $18,000 rent share been included, break-even would have risen to about 2,581 tunes, and the service would have looked far riskier than it is, even though closing it would not save a dollar of that rent.

What this page is doingBreak-even is shown in units and in dollars, because managers think in both.
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Target Profit

To earn $25,000 a season:

Required volume = (fixed costs + target profit) / contribution margin per unit = ($62,000 + $25,000) / $31 = 2,806.5, or 2,807 tunes.

Last season's 2,900 tunes would clear this target, with a profit of (2,900 x $31) − $62,000 = $27,900.

Margin of Safety

The margin of safety is how far sales can fall before the service loses money.

Margin of safety in units = current volume − break-even volume = 2,900 − 2,000 = 900 tunes.

Margin of safety ratio = 900 / 2,900 = 31.0 percent.

Sales could fall by almost a third before the service stopped covering its costs. Ross et al. (2022) treat this ratio as a quick measure of operating risk: the smaller it is, the more a bad season threatens the result.

What the Margin Means for a Ski Business

A 31 percent cushion sounds comfortable, but tune volume depends on snow. In a poor season, when resorts open late and skiers make fewer trips, demand for tunes could plausibly fall by a third. The fixed costs are the risk: the machine lease and the supervisor's salary are owed even if snow never comes. Two changes would lower the break-even point. Leasing the machines by the month, at a modest premium, would turn part of the fixed cost into a cost that can be cut in a bad season. Raising the price to $49 would lift contribution margin to $35 and lower break-even to about 1,772 tunes. Garrison et al. (2021) note that shifting costs from fixed to variable reduces risk but also reduces the gain from a strong season, so the choice depends on how much variability management is willing to accept.

What this page is doingThe final section tests the margin against the risk this business actually faces.
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References

Brigham, E. F., & Houston, J. F. (2022). Fundamentals of financial management (16th ed.). Cengage Learning.

Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (17th ed.). McGraw Hill.

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2022). Fundamentals of corporate finance (13th ed.). McGraw Hill.

What the FNCE 3001 Week 8 instructions ask for

In Week 8 you calculate the break-even point for a product or service and interpret it. Start by classifying each cost as fixed or variable, explaining any item that could go either way and excluding costs the decision cannot change. Find contribution margin both per unit and as a percentage of price. Calculate break-even volume in units and in sales dollars, and a target-profit volume if the prompt asks. Then compute the margin of safety in units and as a percentage of current or forecast sales. Close by interpreting that margin in light of the risks the business faces and any changes that would lower break-even.

Inside the FNCE 3001 Week 8 example

The analysis states the question and last season's volume. A cost table classifies five items with reasons, and a paragraph explains why piece-rate labor is variable and the rent share is excluded, citing Brigham and Houston. Next come the $31 margin, the 2,000-tune and $90,000 thresholds and the 2,807-tune profit target, each worked as a formula with values. The margin of safety section computes 900 tunes and 31 percent, citing Ross and colleagues. A final section discusses how a poor snow season could erase the cushion and compares two ways to lower break-even, citing Garrison and colleagues on the trade-off between fixed and variable costs.

Reading the FNCE 3001 Week 8 rubric

Break-even analyses are graded first on cost classification. Misclassifying a cost, or including an allocated cost the decision cannot avoid, changes every result and earns significant deductions. Contribution margin belongs on the page both per unit and as a percentage. Break-even should be shown in units and in dollars, with formulas visible. The margin of safety is what turns a calculation into analysis, and strong papers interpret it against the actual risks of the business. Suggestions to lower the break-even point should be specific and should acknowledge their trade-offs. Rounding should be sensible; a fraction of a unit is rounded up for a target. Stating every formula before substituting values makes each step easy to verify.

FNCE 3001 Week 8 help from the desk

List every cost the prompt gives you and ask of each: if volume doubled, would this cost double? If yes, it is variable; if it stays the same, it is fixed. Then ask whether the cost would disappear if the product were dropped; if not, it does not belong in the decision. Compute contribution margin, divide fixed costs by it and check your answer in dollars. Compare the result with actual sales to get the margin of safety. Finally, ask what could make sales fall that far. Common errors are including allocated overhead and stopping at the break-even number. Send us your cost data and we can build a model analysis. Present the results in both units and dollars, since managers think in both. Then round sensibly and state the rounding.

Get a FNCE 3001 Week 8 example written to your instructions

For a Week 8 sample the desk works from the prompt, its rubric and the cost data your section supplied. The analysis comes back with the classification laid out, the volume computed both ways, and the margin of safety measured against the sales figure in your case. A first sample costs nothing, arrives inside 24 to 48 hours, and its exhibits follow your classroom's format.

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FNCE 3001 Week 8 questions, answered

Where can I find a free FNCE 3001 Week 8 sample paper?

The cost table, every calculation and the risk discussion are reproduced in full on this page, free.

How many tunes does the FNCE 3001 Week 8 service need to break even?

2,000 tunes a season, or $90,000 in sales, at $45 a tune with a $31 contribution margin.

Why is the store rent share excluded?

The store would pay the same rent without the tuning service, so the decision cannot change it.

What is the margin of safety?

900 tunes, or 31 percent of last season's 2,900, the amount sales could fall before the service loses money.

How could the service lower its break-even point?

By leasing machines monthly so part of the fixed cost can be cut in a bad season, or by raising the price to $49.