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Training guide to break even analysis.
What is breakeven analysis?
Break even analysis is a calculation to show at what point you are making no profit or loss, so it is when a businesses total revenue covers total costs so it is to show how much output you will have to produce to cover your total costs, within a business. Break even is usually shown in the form of a graph. To work out the break even point of a business you need 3 important components which are:
1. Fixed costs, which are not usually associated with production- these are costs that are at a set price and will not change if income is high or low e.g. Rent and insurance.
2. Variable costs- these are costs that change depending on amount of use and output of sales and the capacity of production e.g. Electricity, parts and materials.
The fixed costs and the variable costs amount to the total costs.
3. Selling price- The price at which they are going to sell their product or service.
When you have calculated......
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Title: Break Even
Approximate Word Count: 1140
Approximate Pages: 5 (250 words per double-spaced page)
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Break Even
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