How to Conduct a Breakeven Analysis
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- Опубликовано: 9 ноя 2012
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One of the tools that companies utilize to set prices is the breakeven analysis. This analysis helps companies determine the number of product units they would need to sell to cover their variable and fixed costs. In this brief video, I'll walk you through how to calculate the breakeven point.
BP = Break-even point
FC = Fixed cost (cost of running the business stays the same regardless of the mount of products produced)
P = Price
VC = Variable cost (cost of making the product)
why're you saying what he just said
@@Kenji-ug5bo Because people like me can't remember what they stand for (I'm not an English native speaker).
Thank you OP!
@@TrubbleBeast nahh i meant why he was repeating the same things cos the guy in the video explained it too. however glad that you understood it better :)
@@Kenji-ug5bo And I answered you... Because its easier to look back at something written than to find the timestamp where he explains it verbally for example :)
@@TrubbleBeast thats very true thanks i could actually use that little gimmick later while studying it just might really help. thanks again.
Thank you so much. I was doing my homework when I realized my professor didn't even cover how to find the breakeven point.
This channel is super. Thank you for explaining in simple terms. well done.
Break Heaven sent! I was working on an assignment and my teacher being great, I still couldn't have a clearer formula for Breakeven point with all the material given I explored, and let's say it, video learning is my thing, I am a visual person before all!
Thank You. This was the most simplistic and easiest to understand breakdown of this formula.
This is SO simple! Thank you so much, you're a life saver!
Thanks. You simplified things for me. I finally got it
You saved me a lot of grey hairs. The Advanced Algebra book that I am using now is extremely complicated when explaining the "formulas" ; which are different than your easy and simple formula you gave in your video. I understood what the BP was, but the steps in this book was like a gibberish.
Elizabeth M. So sorry to hear that, but I'm glad the concept makes a bit more sense now. Thanks for watching!
Thank you! I used this to review for my finals! You explained it clearly :)
This just made my life easier! Thank you
I start my operations management class in the summer so this was very helpful!
Very clear and concise. Thank you
Thank you, it did simplified the process. Wish I had a Professor like this one.
Nah fr
Thank you very much for posting!
Very simple and straightforward’ thank you!
Thank you so much for this!!!
Thank you. This was helpful.
Very helpful, thank you!
Thank you. Very useful especial for a discussion question
Very helpful thank you so much
2:46 utimately you are going to take your VC and multiply it by 5. you done great job sir
Exactly i was very confused in that segment.
Thank u for ur great effort ❤️
Thanks for this video. Never actually thought of advertising as a "fixed" cost.
pretty helpful Thanks
Thank you! Great explanation!
Thank you, I appreciate that!
This inform helped me ..
Thanks ❤
thank you for the clear explanation.
Danica aldovino You are very welcome Danica.
Thanks! Nice video
This is awesome ! Thanks for your explanation.
May I ask if what should be the formula used for finding variable cost if you are given the fixed cost price per unit and break-even point. Thanks!
Excellent !!!! Thank you Sir
Wow Sir. Wow!!Wisdom indeed.
Thank you so much
Very useful...the variable costs😇
Well explained 👏
U r better than my accounts teacher
Thanks!
Thank you very much! this was very helpful. 😊😊
thank you sir
Great video! I have to come up with a breakeven analysis for my business, as I have never done this before, my question is, can I use the numbers from my projection and loss sheet to get the numbers I need for my breakeven analysis?
Another question I have is, what if a person's business offers several services for different prices, does the formula remain the same, does it change? I need major!!!
Bg Gauthier You would need to use per-unit numbers so an income statement may not get you everything that you need. Of course you can get your fixed costs from an income statement, but the price and variable costs will be based on your projections and research. If a business offers several services than the calculations get a little trickier. You can use some method of costing (i.e. ABC costing) to allocate your fixed costs to a specific product, then calculate the breakeven point based upon that figure. Unfortunately that's incredibly detailed and the breakeven point is really a basic type of analysis. Use your best judgement. If you have multiple products, but really only one produces a significant amount of revenue than I would simply go with the single product. The value of this method of analysis is simply pass the first test of financial feasibility. Chances are you'll want to produce pro forma income statements if you're evaluating a business with multiple products. Hope this helps. Best,Matt
Thank you
Thank you for simplifying this for me...wish my financial management prof. could do the same...
Akosua Aikman Glad I could help! Best of luck to you.
+Akosua Aikman They have a way of making easy stuff like producing a way to get to the moon in two weeks
very helpful
Thanks Toby!
please help how did you get your answer
Well, I'm here for our Feasibility Study. Hahahaha and it helps a lot! Thank you💛
@ minute marker 3:39, you state 500,000 divided by ($20 minus “fixed cost” $10) isn’t this the variable??
BP-> FC+ DEP/P-VC is this ok with depreciation? Cz thats why my professor said and im confused now 😂
A plant manufactures wooden pallets has the capacity to produce 250,000 pallets / year . Presently the plant is operating at 60 % of capacity . The average selling price of a pallet is $ 25 with a variable cost of $ 20 . At zero output , the plant's annual fixed costs are about $ 800,000 and are approximately constant up to the maximum production quantity per year . a - With the 60 % of capacity production , what is the expected annual profit or loss for the plant ? b - What annual volume is required in order for the plant to break even ? C- What would be the annual profit or loss if the plant were operating at 80 % of capacity ?
Is it possible to determine break even point without number of units produced and sold and price per unit.
You need the price to determine the revenue
You have a mistake around 2:50 you say FC go up with more production. I think you meant VC. Cheers
Adam Del Duca Both could go up with increased production
nah Fixed cost is "fixed" for a reason
Orphans depends on the fixed cost. For instance rent from a lease can only stay fixed for so long until it excels annually in a certain amount of years.
@@patrickj.8429 They talking about manufacturing companies.
no he is right, fixed costs increase with more production
Huh? Why at subject of pricing and management is a bit different..
thank u :">
Thx alot
Thank you for the invaluable information you are sharing. My question is how do you calculate break even dollar when units are not provided and just dollar value alone?
For example: You have $940 as fixed cost and it costs you $30 to produce a product. You calculate:
940/(40 - 30)
= 94
YOU WOULD NEED TO SELL 94 PRODUCTS.
^^^^^^^^^^Now you have the units ^^^^^^^^^^
@@JJJr14 Where did that phantom 40 come from??
@@charlottethomas5949 That's what I wanna know
40???🤔🤨
Great!😁
Now does it mean that if you have many products you could use average price
Is depreciation a fixed cost?
Wow. So i guess if a heart breaks it does breakeven!! The more you know.
(:
😂😂🔥👏👏exactly
What if I have multiple products?
How to make this on graph ?
I am so sh8cked! I understand !!! Thank u
Monique-Gail Samuels Glad it became clear! Thanks for watching.
nice
whats fixed cost, pls could you elaborate, we were making a business plan and we needed to make a break even point analysis
+Mr0Hayate Thanks for the question. This video should help: ruclips.net/video/582lLYfTP08/видео.html
thank you for the reply, this really helped
Can you please help me out with this question
Eastman publishing company is considering
publishing a paperback text book on
spreadsheet application for business. The
fixed costs of manuscript preparation,
textbook design and production setup is
estimated to be $160,000Variable production
and material costs are estimated to be $6 per
book. Demand over the life of the book is
estimated to be 4000 copies. The publisher
plans to sell the text to college and university
bookstores for $46 each.
a. What is the breakeven point?
b. What profit or loss can be anticipated with a
demand of 3800 copies?
c. With a demand of 3800 copies, what is the minimum
price per copy that the publisher must charge to
break even?
d. If the publisher believes that the price per copy could
be increased to $50.95 and not affect the anticipated
demand of 4000 copies, what action would you
recommend? What profit /loss can be anticipated
I'm definitely not doing doing your homework.
@@Alanisbusinessacademy it's not homework it's those questions you see at the end of a chapter and I've been trying to do it for days.... Atleast do C & D please
economic break even please
Please,free the Footer area to see your excercises
Ben Wyatt would be proud.
Dear Friends,
I want to confirm:
If a company has passed the break-even point, why should we do variable costs minimums and maximum fixed costs then the profits will increase more?. Thank you.
I'm confused
Lol is this Sean McVay..?
Someone try and solve this:
Mark is planning to sell lemonade at a lemonade stand. It costs:
$175 to build the lemonade stand,
$7.99 to buy the jug,
$2.75 for the wooden spoon,
$11.99 to buy 300 cups of lemonade worth of lemonade mix,
$4.99 to buy 50 paper cups for the lemonade.
1. What is the LEAST COST that Mark can charge per cup?
2. How many cups does Mark need to sell to break even if he charges 75 cents per cup?
VC cheeers
you talk a lot unnecessary sir
thank you, this was very helpful
+Nikita Miller Glad to hear that. Thanks for watching and please subscribe.