For this, we must do tasks related to a retail store selling DVDs. This business is relatively simple with approximately the same contribution margin percentage for all products.
1. Make a list of all fixed costs associated with running the business. Estimate the amount of each fixed cost per month.
2. Make a list of all variable costs associated with running the business. Estimate the amount of each variable cost per unit.
3. Given the fixed and variable costs that have been identified, compute the break-even point for your business in either units or dollar sales.
4. Assess the prospects of your business making a profit.