Amount of revenue that is needed to cover all of the fixed costs.
Revenue at BREAK EVEN point is $0.00
The break-even point, or BEP, is the point where revenue and expenses or cost are equal. It is when an individual has broken even and there is no net gain or loss.
That is called a Break Even Point
margin of safety
Draw graphs of cost per item and revenue per item. In general, the first graph will start above the second but the second will have a steeper slope. As a result, the revenue per item may cross the cost graph and that is the break-even point.
1) By drawing up the Break-even chart and determine the intersection point between the Total revenue and Total cost curve. 2) Using the break even quantity formula = Fixed cost / per unit Contribution ( to find break even in $, you simply use the above result and times it with the selling price.)
Disadvantages of break even analysis includes: * These are the assumptions mentioned above such as Sales=Stock or Total Revenue and Total Cost functions are linear. * The model is static, it cannot account for changes in environment.
A BEP is a break-even point, the point at which total costs equal total revenue and the organization neither makes a profit or a loss.
687 units
Disadvantages of break even analysis includes: * These are the assumptions mentioned above such as Sales=Stock or Total Revenue and Total Cost functions are linear. * The model is static, it cannot account for changes in environment.
Following data is required to calculate break even point: 1 - Sales revenue or sales price per unit 2 - variable cost per unit 3 - fixed cost
Breakeven revenue is the amount required to make $0 profit once total fixed and variable costs have been deducted so the answer is 2160000 + 3000000 = $5160000