4. break even analysis

Break-even analysis

Specification detail

• Including calculating break-even point and safety margin; how changes to price and costs affect the break-even point;

• The value to business of using break-even analysis

Downturn: Here

• In break-even analysis, margin of safety is the extent by which actual or projected sales exceed the break-even sales.

• If you know how much output is being sold, what is the value between the Breakeven point and the actual output level.

Features of a Break Even GraphCosts/Revenue

Jackets

500

1000

1500

2000

2500

3000

025 50 75 100 125 150

Break- even

Revenue is the same as Sales

Total Costs

Fixed Costs

75 Jackets

LOSS

PROFIT

Actual output level

Margin of safety

Variable Costs