Breack Even Point Coursework Example | Topics and Well Written Essays - 1500 words

Breack Even Point - Coursework ExampleThe breakeven dit is likewise taken into consideration by the attention for finalising the marketing budget and other live expenses for a fact month, quarter or year. Breakeven analysis is also necessary for new entrants to determine the total capital emergency for starting a business. In reality, majority of the companies need approximately 18 months to reach a point from where they can start making profit. Until then, the company needs particular capital (working capital) to run the business. Breakeven analysis is one(a) such vital nib that assists in understanding when the business will start generating profit, how much extra working capital should be arranged and how much money should be allocated for marketing and other vital activities. The given project will attempt to discuss breakeven analysis in depth to understand how it is conducted, what argon the factors that should be used while determining the breakeven point. The concept will be discussed with help of a numeric example so one can understand the real life application of this analytical tool in the decision making process.Breakeven point is the point of zero profit (Hansen, Mowen & Guan, 2007, p.591). In simple spoken communication it can be said that breakeven point is a sales volume at which the revenue get by a firm equals the cost incurred within a specific time period. While evolution the business plan for a new venture, the management takes into account different types of costs that will be incurred in the business process. The management then decides the profit margin on the products and hence the final interchange price per unit is determined. Considering the total cost as well as the selling price per unit, the management determines the minimum sales so that the company can pay for all the expenses without making any profit. on that point are two commonly used approaches to determine the breakeven point it can be