Break Even Project

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PROJECT: The BREAK-EVEN Project is worth 20% of the total grade (or 200 points) in the class. For this project each student is to pull off of YahooFinance.com a full set so financials statement s (income statement, balance sheet and cash flow) for a company that they chose. Using the format should on the Break-Even Project Sheet they are to create a Break-Even Analysis for the company. The student is to identify whether they feel the company is a risky company (based on fixed costs) and how the company could improve they position. This should be no less than a 3 page paper.

Break Even Analysis

*Based on information from the 2005 Income Statement of Chipotle Company

*Break even sales is the total fixed costs added to the variable costs

Identification of Variable Costs

Cost of Revenues = $511,621,000

Identification of Fixed Costs ( some assumptions were made)

Selling General and Administrative = $51,964,000

Interest Expense = $790,000

Others = $28,026,000

Fixed Costs = $80,780,000

1. Calculation of Contribution Margin

Revenues = $627,695,000

Minus Variable Costs = $511,621,000

Contribution Margin = $116,074,000

2. Calculation of Break Even

Variable Cost = $511,621,000

Fixed Costs = $80,780,000

Break Even = $592,401,000

*To take it one step further I will assume that revenues are generated primarily from burrito sales at $5.60 each.

592,401,000/ 5.6 = 105,785,893

*I estimate that Chipotle needs to sell roughly 105,800,000 burritos to break even based on the information supplied.