Boeing-Breakeven Analysis

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Boeing Co.-Breakeven Analysis

The Boeing 737-900ER was released in July 2005 and made its first delivery to Indonesia's Lion Air in 2007. The price of the 737-900ER ranges from $74,000,000-$89,000,000 per plane. The purpose of this assignment is to apply breakeven analysis to a project within Boeing using data obtained from the company’s website as well as fabricated information used to apply the tool. The fictitious information was used only because Boeing didn’t provide a breakdown of costs per program. Let’s assume that Boeing's annual fixed cost for the 737-900ER are $980 million, and its variable cost per airplane is $65 million. In order to calculate the break even point, the contribution margin for each plane must first be calculated as follows (Note: Assuming the price of the plane is $89,000,000):
1. Sales price - Variable cost per plane: 89-65=24 million
Next, since the total fixed cost is given, the break even point can be calculated.
2. Break even point= 980/24= 40.83 planes
Thus, Boeing needs to sell approximately 41 airplanes in order to achieve their break even point.

Module 2: Session Long Project Page 3

In terms of sales dollars, the figure will be: 40.83 x 89 million= 3634.17 million or 3.634 billion dollars. In conclusion, the 737-900ER’s overall break even point was low, indicating that the overall operations of the project are within a reasonable scope and there’s no huge threat of potential difficulties within the company, unless the break even point reaches their sales volume, which could cause a problem if they become limited on resources. Break even point analysis is a great tool transmit helpful information to companies, but its inability to illustrate how profit changes as activity changes within the organization calls for other methods to assist in the overall

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