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PPT - Break Even Analysis B Com Notes | EduRev

B Com : PPT - Break Even Analysis B Com Notes | EduRev

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? A breakeven analysis is used to determine how much sales
? The breakeven analysis is especially useful when you're
developing a pricing strategy, either as part of a marketing
? 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
Page 3

? A breakeven analysis is used to determine how much sales
? The breakeven analysis is especially useful when you're
developing a pricing strategy, either as part of a marketing
? 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
Page 4

? A breakeven analysis is used to determine how much sales
? The breakeven analysis is especially useful when you're
developing a pricing strategy, either as part of a marketing
? 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.
Page 5

? A breakeven analysis is used to determine how much sales
? The breakeven analysis is especially useful when you're
developing a pricing strategy, either as part of a marketing
? 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 )
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Cost Accounting

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