Know the Importance of the Break-Even Analysis Assignment
Assignments in business are provided by considering the real business situations. Students are serious and try to manage their work with real projects. One of the most perfect topics that they should know about is Break-Even Analysis.
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What is Break-Even Analysis?
This important term Break-Even Analysis determines when a business is able to cover the total expenses of its business materials so that it can be in profit now. Suppose the total amount of the materials in a business is $50,000 and now you have to determine whether your business earned $50,000 by selling the products or not.
If it is more than $50,000, then the business is in profit. So, the break-even analysis will be perfect if total expenses = total earn by selling products.
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How to calculate break even point?
First of all, the term break even point is the position or the point at which total expenses or cost is equal to the total revenue. Now, to calculate the breakpoint, it is important to determine the fixed as well as variable cost.
Fixed costs are those which are not varied in any ways with administrative salaries, sales volume and rent. It is also said that these are paid regardless of sales. So, these are one type of overhead cost.
Breakeven point = fixed costs/ (unit selling price – variable costs)
Here, another factor is variable costs and these are variables which can easily be varied according to the proper condition.
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