How to Conduct a Breakeven Analysis

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How to Conduct a Breakeven Analysis

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Күн бұрын

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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.

Пікірлер: 115

@Zohirul-Jewel 7 жыл бұрын

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)

@Kenji-ug5bo 6 жыл бұрын

why're you saying what he just said

@TrubbleBeast 5 жыл бұрын

@@Kenji-ug5bo Because people like me can't remember what they stand for (I'm not an English native speaker). Thank you OP!

@Kenji-ug5bo 5 жыл бұрын

@@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 :)

@TrubbleBeast 5 жыл бұрын

@@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 :)

@Kenji-ug5bo 5 жыл бұрын

@@TrubbleBeast thats very true thanks i could actually use that little gimmick later while studying it just might really help. thanks again.

@tashibalampkin8555 6 жыл бұрын

Thank you so much. I was doing my homework when I realized my professor didn't even cover how to find the breakeven point.

@elizabethm.4283 9 жыл бұрын

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.

@Alanisbusinessacademy 9 жыл бұрын

Elizabeth M. So sorry to hear that, but I'm glad the concept makes a bit more sense now. Thanks for watching!

@AlignacademyTV 3 жыл бұрын

Thanks for this video. Never actually thought of advertising as a "fixed" cost.

@georgegt4915 4 жыл бұрын

2:46 utimately you are going to take your VC and multiply it by 5. you done great job sir

@isaacyo 3 жыл бұрын

Exactly i was very confused in that segment.

@MayweatherjrWONandsoTrump 10 жыл бұрын

Thank you, it did simplified the process. Wish I had a Professor like this one.

@ben27242 Жыл бұрын

Nah fr

@clementine4133 4 жыл бұрын

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!

@TellAfrica 5 жыл бұрын

Thanks. You simplified things for me. I finally got it

@kimglover8018 2 жыл бұрын

This is SO simple! Thank you so much, you're a life saver!

@mitchkwok 2 жыл бұрын

Thank you! I used this to review for my finals! You explained it clearly :)

@josierebellato6788 3 жыл бұрын

This channel is super. Thank you for explaining in simple terms. well done.

@WonderlandBoudoir 6 жыл бұрын

Thank You. This was the most simplistic and easiest to understand breakdown of this formula.

@AnnaMuzaza 3 ай бұрын

Very simple and straightforward’ thank you!

@Carrm3ist3r 2 жыл бұрын

I start my operations management class in the summer so this was very helpful!

@adamdelduca2064 9 жыл бұрын

You have a mistake around 2:50 you say FC go up with more production. I think you meant VC. Cheers

@eggsb193 6 жыл бұрын

Adam Del Duca Both could go up with increased production

@justplainskill 6 жыл бұрын

nah Fixed cost is "fixed" for a reason

@patrickj.8429 5 жыл бұрын

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.

@Aim4sixmeals 4 жыл бұрын

@@patrickj.8429 They talking about manufacturing companies.

@shahzodmashrabi9085 4 жыл бұрын

no he is right, fixed costs increase with more production

@rovalg1584 5 жыл бұрын

U r better than my accounts teacher

@princessdanicaaldovino1516 9 жыл бұрын

thank you for the clear explanation.

@Alanisbusinessacademy 9 жыл бұрын

Danica aldovino You are very welcome Danica.

@lilianmogoah4135 5 жыл бұрын

This just made my life easier! Thank you

@sinclair657 10 жыл бұрын

Thank you for simplifying this for me...wish my financial management prof. could do the same...

@Alanisbusinessacademy 10 жыл бұрын

Akosua Aikman Glad I could help! Best of luck to you.

@charlesunderwood9911 9 жыл бұрын

+Akosua Aikman They have a way of making easy stuff like producing a way to get to the moon in two weeks

@esraaashraf9874 4 жыл бұрын

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 ?

@emmanuelojimba8001 4 ай бұрын

This inform helped me .. Thanks ❤

@bggauthier6067 10 жыл бұрын

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!!!

@Alanisbusinessacademy 10 жыл бұрын

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

@lyricsthetic7 Жыл бұрын

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!

@mjaber4388 6 жыл бұрын

Wow. So i guess if a heart breaks it does breakeven!! The more you know.

@johnnwatson2050 5 жыл бұрын

@felicitymabuza1280 2 жыл бұрын

😂😂🔥👏👏exactly

@amandadube156 4 жыл бұрын

Very clear and concise. Thank you

@g97erry 7 жыл бұрын

Thank you very much for posting!

@sandilesyandamkhize6698 3 жыл бұрын

Thank you. Very useful especial for a discussion question

@ndumisoradebe5256 5 жыл бұрын

Is it possible to determine break even point without number of units produced and sold and price per unit.

@loppyhero7196 5 жыл бұрын

You need the price to determine the revenue

@marycatherine3857 4 жыл бұрын

Very useful...the variable costs😇

@hisham7234 4 жыл бұрын

Thank you. This was helpful.

@hichsonmcthebe9669 Жыл бұрын

Excellent !!!! Thank you Sir

@mercytarusarira4794 Жыл бұрын

Well explained 👏

@daphneerose8026 Жыл бұрын

What if I have multiple products?

@johnlakea 9 жыл бұрын

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?

@JJJr14 6 жыл бұрын

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 ^^^^^^^^^^

@charlottethomas5949 5 жыл бұрын

@@JJJr14 Where did that phantom 40 come from??

@loppyhero7196 5 жыл бұрын

@@charlottethomas5949 That's what I wanna know

@zibusisombasela1711 4 жыл бұрын

40???🤔🤨

@accountingwithteacherphath8616 4 жыл бұрын

Wow Sir. Wow!!Wisdom indeed.

@DerejeTeklu-ip8hh 8 ай бұрын

Please,free the Footer area to see your excercises

@Mr0Hayate 9 жыл бұрын

whats fixed cost, pls could you elaborate, we were making a business plan and we needed to make a break even point analysis

@Alanisbusinessacademy 9 жыл бұрын

+Mr0Hayate Thanks for the question. This video should help: kzfaq.info/get/bejne/a55in6-Ky7q0YGw.html

@Mr0Hayate 9 жыл бұрын

thank you for the reply, this really helped

@aziznasser14 4 жыл бұрын

Thank u for ur great effort ❤️

@hellojasgarcia 7 жыл бұрын

Thank you very much! this was very helpful. 😊😊

@raquelm.w.7974 4 жыл бұрын

Very helpful, thank you!

@cmmts 8 жыл бұрын

Thank you! Great explanation!

@Alanisbusinessacademy 8 жыл бұрын

Thank you, I appreciate that!

@theerapongwisessiri4437 7 жыл бұрын

This is awesome ! Thanks for your explanation.

@jewelpolicarpio5497 3 жыл бұрын

Well, I'm here for our Feasibility Study. Hahahaha and it helps a lot! Thank you💛

@jolieobi 7 жыл бұрын

pretty helpful Thanks

@zaynabnuzhah7318 5 жыл бұрын

Thank you so much for this!!!

@ntcuong01ct1 3 жыл бұрын

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.

@mikorees5853 4 жыл бұрын

Thanks! Nice video

@noreenm5018 8 жыл бұрын

Very helpful thank you so much

@lonemotheo1964 3 жыл бұрын

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

@Alanisbusinessacademy 3 жыл бұрын

I'm definitely not doing doing your homework.

@lonemotheo1964 3 жыл бұрын

@@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

@tchanaalbert9296 4 жыл бұрын

Now does it mean that if you have many products you could use average price

@aitaisakura4281 7 жыл бұрын

Huh? Why at subject of pricing and management is a bit different..

@Drea624 4 жыл бұрын

@ minute marker 3:39, you state 500,000 divided by ($20 minus “fixed cost” $10) isn’t this the variable??

@tobymcrae7058 7 жыл бұрын

very helpful

@Alanisbusinessacademy 7 жыл бұрын

Thanks Toby!

@mpredz 8 жыл бұрын

Thanks!

@zaydsoliman4441 6 жыл бұрын

Thank you so much

@discoveringme941 4 жыл бұрын

Is depreciation a fixed cost?

@JessicaTorres-ht2zb 6 жыл бұрын

please help how did you get your answer

@gizmoff6573 2 жыл бұрын

Thx alot

@olodunemmanuel1832 6 жыл бұрын

Thank you

@SKY-ot7ot 7 жыл бұрын

thank you sir

@graffitifreak333 4 жыл бұрын

BP-> FC+ DEP/P-VC is this ok with depreciation? Cz thats why my professor said and im confused now 😂

@ghazanfarali6854 10 жыл бұрын

How to make this on graph ?

@maureenbennett809 Жыл бұрын

Great!😁

@motanveer5108 6 жыл бұрын

Ben Wyatt would be proud.

@epiphaniemukasine1184 Жыл бұрын

I'm confused

@JesusChristreinzover 9 жыл бұрын

I am so sh8cked! I understand !!! Thank u

@Alanisbusinessacademy 9 жыл бұрын

Monique-Gail Samuels Glad it became clear! Thanks for watching.

@BarnOwlz 8 жыл бұрын

economic break even please

@lethycegwyneth8698 3 жыл бұрын

thank u :">

@kennahycopatience5839 8 жыл бұрын

nice

@user-lp3zr3oj9z 4 жыл бұрын

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?