yo yo yo what have I gotten myself into who am i what am i doing what's the
dealio what's going on I don't even know anymore hold on get together get it
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don't make all your dreams come true I think all your food not have any
calories in it so that's really important and also find companionship if
you're looking for that so really a one-stop shop basically is what I'm
trying to say I have a classic series sixth series dang it aah dang it man
angry anyway and dang me this is my classic series right number 67 of the
classic series can't believe them on 67 already can't believe it hot in here I
was having a bad hair day what it's hot so verse crapola so the hair comments
because it's too hot to have a hat on right now probably number 67 it's going
to be fixed in variable costs we're going to have a fixed and variable costs
let's go let's get into this now we're going to Zone in it's me me and my squad
my DC Aylor squad my got my strippers up caring what I what up now this I know
what you're going to say this is an incident financially can we do financial
accounting well this is accounting basics this is a managerial accounting
book I get so many more in all the comments I do have a lot of people in
college taking Friday into accounting but there's also going
to be some people in college taking managerial accounting this is managerial
accounting so we're going to do some videos around here in accounting zips
what I feel like doing for right now also you know if you have if you're
starting up a small business so I have I do have a quite a few small business
owners that that watch this or people are trying to get a job and this might
be in a enter more their job interviews so is just a good thing to have it's
just a good knowledge base to have and I think it's real life to like I've used
this before I I was always doing you know breakeven analysis and stuff and
like how much how many widgets do I have to sell to make some money you know
breakeven because I got my I got my rent I got my car insurance you know I got
gas and that's a variable cost and buh-buh-buh-buh fixed and variable costs
let me just let me just let me just try to run through this and hopefully I can
explain everything between the fixed and variable costs all right we're in these
examples we're where we have actually might you know a stripped down bare
bones Dorn CPA LLC taxes an S corp I like that hybrid you know saying fixed
costs stay the same no matter how many tax returns we sell all right like look
like the rent this is per month the rents going to be $400 a month whether
we sell here's our little chart down here okay here's our expenses and here's
our tax returns so here's our here's our fixed fixed costs down here it's the
saying no matter how many tax returns you sell and like we could sell zero to
six tax returns and our fixed costs are always going to be $600 right because
rent doesn't matter if it sells zero or six tax returns our rent still going to
be $400 then we got our we fee or our internet it doesn't matter how many how
many tax returns we sell zero or six tax returns
it's still the wee-fee is still going to be $100 same as the phone it's a fixed
cost it's fixed it stays the same it's fit doesn't matter for our cost doesn't
matter if we sell zero or six of them it's going to be fixed if you you know
no matter how many you sells they're going to be $600 $600 now here's the the
fun of the fun I guess the front of this is the variable cost now look I did I
did so so sorry our rent four dollars we $300 and $400 600 ollars a month's of
fixed fixed costs we tell we sell zero tax returns we still have to pay rent we
still have to pay air we through stuff to your phone so we're out $600 variable
costs look I wrote I underlined under vary from barrel costs that vary upon
how many sold all right so you can go variable variable fixed fixed it's fixed
it's done it's over with variable very very very very done how many I sell
variant varies so on RK attacked our variable cost is tax preparation
software which costs $50 per return it's the software where I where I can put my
stuff in and it's really worth it to me because if I had to do a tax return by
hand without the software would take me so much time would take me days so it's
worth it to me that's our variable constant that's 50 $50 per part tax
return and now the other thing so that's all our costs
that's all our costs we have we have our fixed costs that are going to change and
then we only do one thing we sell tax returns and every tax return we sell it
costs us $50 on top of the fixed costs that's our variable costs we sell tax
returns for $200 all right that's our that's our selling price for $200 so
really you've got you've got your costs and your revenue so now you've got to
figure out stuff I mean you got to figure out you have you have
a certain certain amount of money in the bank you got to say hey like you know
how many tax returns can I do if I don't do any tax or tell
me how many months can I stay in business but that's that fixed costs you
know and let's say I do a couple of how many how many how many tat you know this
is a huge one really is a break-even point it's like how many tax returns do
I have to do per month to break-even to have my revenue equal my cost so that's
super important right and and everyone's in business to make money so you want to
know what your break-even point and do a couple more than that you know before
you before you get in any business you should really figure out this breakeven
points it's like if I'm if I'm doing this and and my break-even point is like
say 40 tax returns or months and there's no way I can do that many tax returns at
a month you know like the most I can do is 20 tax returns then my business model
is not going to work these are fixed costs of purple that I went to our very
I make variable costs in blue here I thought to have you nice to have
variable cost in blue and I made this nice little
graph so let's just go in the ground we're going to look filled with tax
returns we sell zero tax returns that's all fixed cost then of $600 and
that's how that's how much our costs are to produce your tax returns and then we
sold your tax return so our revenue is zero dollars so we're we're in the whole
six hundred bucks now what happens if we do one tax return one tax return well
you're going to have all of the $600 615 to the cost you $50 additional because
that's how much the tax software cost so for one tax return you're going to have
six hundred fifty dollars of costs six hundred fix 50 variable and then you're
going to make $200 so one tax return you're going to be in the hole for 50
what happens when you tell what happens when you sell to tax returns well six
are dollars of fixed costs of course now to to tax returns is going to be an
extra $100 $50 each of variable costs can be $1 of variable costs and then if
you sell two tax returns it's going to be $700 $700 and costs 600
fixed 100 variable and then you're going to have $400 so you're going to be in
the hole $300 see you're the hole little bit less every time you sell one with
our our factors are going let's see what happens when you sell would sell three
tax returns that money again $600 of fixed costs then three three tax returns
that's going to be $50 each $150 from variable costs so three boom boom boom
boom boom yeah 750 it's going to cost you $750 and then you're going to make
six hundred they're going to make six hundred ollars so you don't need a whole
150 what happens when you so what happens when you sell for for tax
returns $600 and six costs and then four well we have $50 each and tax off tax
software variable cost that's 200 more dollars in variable costs so boom boom
boom boom boom boom boom boom that's going to be $800 so you have six $600
and fixed 400 and variable and look at this and you solve for and now you've
made 800 so so four is our break-even point four is our break-even point so
that's important to know right break even for four
all right but works dude we're trying we're trying to at least get some money
take my girl out just like that to 420 Applebee's I mean at least right I mean
she's like you work all you do all you do is work
you lose money what sense does that make exactly so but we gotta we gotta at
least sell for we got at least so for to not lose money or you know actually sell
three we're not losing that much money you get the gist is just you need to
figure this out when you're starting a business say sell five tax returns now
hopefully we're going to make a profit right because if we just if we just
broke even because look are now you would think
because our fixed costs are the same right and here comes here comes in the
stuff our fixed costs are the same we just broke even on four so now with one
tax return we make $200 right we're making $200 but we have a variable cost
of 50 so for every unit we make above and beyond the fixed costs we make $150
profit so I assume that now we're going to make a 100 we are we were broken even
at four units sold now with five units sold look we're going to put we're going
to make 150 dollars profit and then with six we're going to make 300 oh we're
going to make a $300 profit let's just finish the start up with five look six
hours in fixed cost boom boom boom boom boom boom boom five five times five for
our variable cost for our tax return software it's going to be the next for
$250 so $850 is our costs and then if we if we sell five tax returns at 200 each
at $1,000 so see four we were broken even now now we sell five and now we now
we made $150 in profit what about when we sell six still $600 for fixed cost
you get the point now I tried to you know abuse you with the fixed cost you
get to fix house I don't change
so now we've sold out your soul nouns now we've sold six tax returns this
month hence key dollars each variable cost is going to be $300 more in
variable costs so we have a nut $900 total six nine three nine hours total of
costs and look we made another 150 profit and a total total we've made
three hundred dollars profit for the ones every every more every unit we sell
we're going to make $150 more now I'm a profit every unit we sell so once it hit
that breakeven point it's like let's let's make it let's get our chippers up
you know juices