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General Accounting Discussions: BREAK EVEN PONIT

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    • CommentAuthorhaja
    • CommentTimeMay 22nd 2007
     
    How can I determine break even point for a law firm (only revenue is lawyers' fees)?
    • CommentAuthorCounter
    • CommentTimeMay 22nd 2007
     
    The first step is to sort the firm's costs into variable (vary with fees or hours) costs and fixed costs. Lawyers' fees minus the variable costs equals the contribution margin(CM). Divide the CM by the lawyers' fees and you have the CM Ratio. Divide the firm's fixed costs by the CM Ratio and you have the breakeven point in dollars.

    You could also compute the CM per billable hour.
    Thankful People: haja

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