PPT - Break Even Analysis | Cost Accounting - B Com PDF Download

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? A breakeven analysis is used to determine how much sales 
volume your business needs to start making a profit. 
? The breakeven analysis is especially useful when you're 
developing a pricing strategy, either as part of a marketing 
plan or a business plan.
? In economics & business, specifically cost accounting, 
the break-even point (BEP) is the point at which cost or 
expenses and revenue are equal: there is no net loss or gain, 
and one has "broken even".
? Total cost = Total revenue = B.E.P.
INTRODUCTION
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? A breakeven analysis is used to determine how much sales 
volume your business needs to start making a profit. 
? The breakeven analysis is especially useful when you're 
developing a pricing strategy, either as part of a marketing 
plan or a business plan.
? In economics & business, specifically cost accounting, 
the break-even point (BEP) is the point at which cost or 
expenses and revenue are equal: there is no net loss or gain, 
and one has "broken even".
? Total cost = Total revenue = B.E.P.
INTRODUCTION
BREAK EVEN POINT
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? A breakeven analysis is used to determine how much sales 
volume your business needs to start making a profit. 
? The breakeven analysis is especially useful when you're 
developing a pricing strategy, either as part of a marketing 
plan or a business plan.
? In economics & business, specifically cost accounting, 
the break-even point (BEP) is the point at which cost or 
expenses and revenue are equal: there is no net loss or gain, 
and one has "broken even".
? Total cost = Total revenue = B.E.P.
INTRODUCTION
BREAK EVEN POINT
? There are two basic types of costs a company incurs. 
• Variable Costs
• Fixed Costs
? Variable costs are costs that change with changes in 
production levels or sales.  Examples include:  Costs of 
materials used in the production of the goods.
? Fixed costs remain roughly the same regardless of 
sales/output levels.  Examples include:  Rent, Insurance and 
Wages
BREAK EVEN ANALYSIS
In order to calculate how profitable a product will be, we must 
firstly look at the Costs Price and Revenue involved.
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? A breakeven analysis is used to determine how much sales 
volume your business needs to start making a profit. 
? The breakeven analysis is especially useful when you're 
developing a pricing strategy, either as part of a marketing 
plan or a business plan.
? In economics & business, specifically cost accounting, 
the break-even point (BEP) is the point at which cost or 
expenses and revenue are equal: there is no net loss or gain, 
and one has "broken even".
? Total cost = Total revenue = B.E.P.
INTRODUCTION
BREAK EVEN POINT
? There are two basic types of costs a company incurs. 
• Variable Costs
• Fixed Costs
? Variable costs are costs that change with changes in 
production levels or sales.  Examples include:  Costs of 
materials used in the production of the goods.
? Fixed costs remain roughly the same regardless of 
sales/output levels.  Examples include:  Rent, Insurance and 
Wages
BREAK EVEN ANALYSIS
In order to calculate how profitable a product will be, we must 
firstly look at the Costs Price and Revenue involved.
? Unit Price:
The amount of money charged to the customer for each unit of a 
product or service. 
? Total Cost:
The sum of the fixed cost and total variable cost for any given level of 
production. 
(Fixed Cost + Total Variable Cost )
? Total Variable Cost:
The product of expected unit sales and variable unit cost. 
(Expected Unit Sales * Variable Unit Cost )