Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Submitted by:        Submitted to:Arun Bhatt           Mr. Anil sirClass : BBA Part IRoll No. :05
CONTENTSBreak even pointIntroduction to break even analysisBreak even calculatorComponents of break even analysisUses...
WHAT IS A BREAK EVENPOINT?In economics & business, specifically cost accounting, the break-evenpoint (BEP) is the point at...
A breakeven analysis is used to determine howmuch sales volume our business needs to startmaking a profit.The breakeven an...
Fixed Cost:The sum of all costs required to produce the firstunit of a product. This amount does not vary asproduction inc...
Total Revenue:The product of expected unit sales and unit price.(Expected Unit Sales * Unit Price )Profit (or Loss):The mo...
The Break-Costs/Revenue             TR               The output isthe                                             As reven...
Helpful in deciding the minimum quantity ofsalesHelpful in the determination of tender priceHelpful in examining effect...
It assumes that fixed costs (FC) are constantIt assumes average variable costs are constant per unit of output, atleast ...
Break even analysis should be distinguished from two other managerial tools :-Flexible budgets and standard cost the varia...
break even analysis
Upcoming SlideShare
Loading in …5
×

4

Share

Download to read offline

break even analysis

Download to read offline

Related Books

Free with a 30 day trial from Scribd

See all

break even analysis

  1. 1. Submitted by: Submitted to:Arun Bhatt Mr. Anil sirClass : BBA Part IRoll No. :05
  2. 2. CONTENTSBreak even pointIntroduction to break even analysisBreak even calculatorComponents of break even analysisUsesLimitationsConclusion
  3. 3. WHAT IS A BREAK EVENPOINT?In economics & business, specifically cost accounting, the break-evenpoint (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". A profit or a losshas not been made, although opportunity costs have been paid, and capitalhas received the risk-adjusted, expected return. break even point) Breakeven Point is desired by all firms who wish to make abnormal profit, overand above all costs. It is shown graphically, at the point where the totalrevenue and total cost curves meet.
  4. 4. A breakeven analysis is used to determine howmuch sales volume our business needs to startmaking a profit.The breakeven analysis is especially useful when weare developing a pricing strategy, either as part of amarketing plan or a business plan.
  5. 5. Fixed Cost:The sum of all costs required to produce the firstunit of a product. This amount does not vary asproduction increases or decreases, until new capitalexpenditures are needed.
  6. 6. Total Revenue:The product of expected unit sales and unit price.(Expected Unit Sales * Unit Price )Profit (or Loss):The monetary gain (or loss) resulting fromrevenues after subtracting all associated costs.(Total Revenue - Total Costs)
  7. 7. The Break-Costs/Revenue TR The output isthe As revenue is Totallowercosts eventotal by the The point TR TC determined the generated, firm Initially a therefore less VC occurs where price,will incur the firm charged and price incur fixed will (assuming total revenue steep thecosts – – variable total costs, these do the quantity sold accuratetotal equals will be thesethis not vary revenue curve. again depend on costs – the the forecasts!) is directly or bythe output with determined sales. firm,of FC+VC sum in this expected produced amount forecast example sales initially. would have to sell Q1 to generate sufficient revenue to FC cover its costs. Q1 Output/Sales
  8. 8. Helpful in deciding the minimum quantity ofsalesHelpful in the determination of tender priceHelpful in examining effects uponorganization’s profitabilityHelpful in deciding about the substitution ofnew plantsHelpful in sales price and quantityHelpful in determining marginal cost
  9. 9. It assumes that fixed costs (FC) are constantIt assumes average variable costs are constant per unit of output, atleast in the range of likely quantities of sales.It assumes that the quantity of goods produced is equal to thequantity of goods sold (i.e., there is no change in the quantity ofgoods held in inventory at the beginning of the period and thequantity of goods held in inventory at the end of the period.In multi-product companies, it assumes that the relativeproportions of each product sold and produced are constant.
  10. 10. Break even analysis should be distinguished from two other managerial tools :-Flexible budgets and standard cost the variable expense budget is built on the samebasic cost – output relationship, but it is confined to costs and is primarily concernedwith the components of combined cost since the purpose is to control cost bydeveloping expenses standards that are flexibly to achieving rate this purpose oftenleads to measures of achieving that differ among costs and operation so that they cantbe readily added or translated in to an index of output for the enterprise as a wholestandard costs on the other hand on.
  • akashwadhva

    May. 11, 2017
  • kawlepratik

    Jan. 14, 2015
  • frehakhan

    Dec. 12, 2014
  • bharathbp1

    Nov. 4, 2013

Views

Total views

4,367

On Slideshare

0

From embeds

0

Number of embeds

4

Actions

Downloads

150

Shares

0

Comments

0

Likes

4

×