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How to Conduct a Breakeven Analysis 

Alanis Business Academy
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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.

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9 ноя 2012

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Комментарии : 115   
@Zohirul-Jewel
@Zohirul-Jewel 7 лет назад
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
@Kenji-ug5bo 5 лет назад
why're you saying what he just said
@TrubbleBeast
@TrubbleBeast 5 лет назад
@@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
@Kenji-ug5bo 5 лет назад
@@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
@TrubbleBeast 5 лет назад
@@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
@Kenji-ug5bo 5 лет назад
@@TrubbleBeast thats very true thanks i could actually use that little gimmick later while studying it just might really help. thanks again.
@clementine4133
@clementine4133 4 года назад
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!
@tashibalampkin8555
@tashibalampkin8555 5 лет назад
Thank you so much. I was doing my homework when I realized my professor didn't even cover how to find the breakeven point.
@WonderlandBoudoir
@WonderlandBoudoir 6 лет назад
Thank You. This was the most simplistic and easiest to understand breakdown of this formula.
@elizabethm.4283
@elizabethm.4283 9 лет назад
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
@Alanisbusinessacademy 9 лет назад
Elizabeth M. So sorry to hear that, but I'm glad the concept makes a bit more sense now. Thanks for watching!
@kimglover8018
@kimglover8018 2 года назад
This is SO simple! Thank you so much, you're a life saver!
@josierebellato6788
@josierebellato6788 3 года назад
This channel is super. Thank you for explaining in simple terms. well done.
@mitchkwok
@mitchkwok 2 года назад
Thank you! I used this to review for my finals! You explained it clearly :)
@TellAfrica
@TellAfrica 5 лет назад
Thanks. You simplified things for me. I finally got it
@lilianmogoah4135
@lilianmogoah4135 5 лет назад
This just made my life easier! Thank you
@Carrm3ist3r
@Carrm3ist3r 2 года назад
I start my operations management class in the summer so this was very helpful!
@MayweatherjrWONandsoTrump
@MayweatherjrWONandsoTrump 10 лет назад
Thank you, it did simplified the process. Wish I had a Professor like this one.
@ben27242
@ben27242 Год назад
Nah fr
@georgegt4915
@georgegt4915 4 года назад
2:46 utimately you are going to take your VC and multiply it by 5. you done great job sir
@isaacyo
@isaacyo 3 года назад
Exactly i was very confused in that segment.
@g97erry
@g97erry 7 лет назад
Thank you very much for posting!
@amandadube156
@amandadube156 4 года назад
Very clear and concise. Thank you
@AlignacademyTV
@AlignacademyTV 3 года назад
Thanks for this video. Never actually thought of advertising as a "fixed" cost.
@princessdanicaaldovino1516
@princessdanicaaldovino1516 9 лет назад
thank you for the clear explanation.
@Alanisbusinessacademy
@Alanisbusinessacademy 9 лет назад
Danica aldovino You are very welcome Danica.
@zaynabnuzhah7318
@zaynabnuzhah7318 5 лет назад
Thank you so much for this!!!
@hisham7234
@hisham7234 4 года назад
Thank you. This was helpful.
@AnnaMuzaza
@AnnaMuzaza 2 месяца назад
Very simple and straightforward’ thank you!
@raquelm.w.7974
@raquelm.w.7974 4 года назад
Very helpful, thank you!
@sandilesyandamkhize6698
@sandilesyandamkhize6698 3 года назад
Thank you. Very useful especial for a discussion question
@jolieobi
@jolieobi 7 лет назад
pretty helpful Thanks
@noreenm5018
@noreenm5018 8 лет назад
Very helpful thank you so much
@aziznasser14
@aziznasser14 4 года назад
Thank u for ur great effort ❤️
@cmmts
@cmmts 8 лет назад
Thank you! Great explanation!
@Alanisbusinessacademy
@Alanisbusinessacademy 8 лет назад
Thank you, I appreciate that!
@lyricsthetic7
@lyricsthetic7 Год назад
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!
@sinclair657
@sinclair657 10 лет назад
Thank you for simplifying this for me...wish my financial management prof. could do the same...
@Alanisbusinessacademy
@Alanisbusinessacademy 10 лет назад
Akosua Aikman Glad I could help! Best of luck to you.
@charlesunderwood9911
@charlesunderwood9911 9 лет назад
+Akosua Aikman They have a way of making easy stuff like producing a way to get to the moon in two weeks
@theerapongwisessiri4437
@theerapongwisessiri4437 7 лет назад
This is awesome ! Thanks for your explanation.
@rovalg1584
@rovalg1584 5 лет назад
U r better than my accounts teacher
@emmanuelojimba8001
@emmanuelojimba8001 3 месяца назад
This inform helped me .. Thanks ❤
@hellojasgarcia
@hellojasgarcia 7 лет назад
Thank you very much! this was very helpful. 😊😊
@jewelpolicarpio5497
@jewelpolicarpio5497 3 года назад
Well, I'm here for our Feasibility Study. Hahahaha and it helps a lot! Thank you💛
@bggauthier6067
@bggauthier6067 9 лет назад
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
@Alanisbusinessacademy 9 лет назад
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
@marycatherine3857
@marycatherine3857 4 года назад
Very useful...the variable costs😇
@mikorees5853
@mikorees5853 4 года назад
Thanks! Nice video
@mpredz
@mpredz 8 лет назад
Thanks!
@zaydsoliman4441
@zaydsoliman4441 6 лет назад
Thank you so much
@accountingwithteacherphath8616
@accountingwithteacherphath8616 4 года назад
Wow Sir. Wow!!Wisdom indeed.
@hichsonmcthebe9669
@hichsonmcthebe9669 Год назад
Excellent !!!! Thank you Sir
@adamdelduca2064
@adamdelduca2064 9 лет назад
You have a mistake around 2:50 you say FC go up with more production. I think you meant VC. Cheers
@eggsb193
@eggsb193 6 лет назад
Adam Del Duca Both could go up with increased production
@justplainskill
@justplainskill 6 лет назад
nah Fixed cost is "fixed" for a reason
@patrickj.8429
@patrickj.8429 5 лет назад
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
@Aim4sixmeals 4 года назад
@@patrickj.8429 They talking about manufacturing companies.
@shahzodmashrabi9085
@shahzodmashrabi9085 4 года назад
no he is right, fixed costs increase with more production
@esraaashraf9874
@esraaashraf9874 4 года назад
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 ?
@mercytarusarira4794
@mercytarusarira4794 Год назад
Well explained 👏
@SKY-ot7ot
@SKY-ot7ot 6 лет назад
thank you sir
@johnlakea
@johnlakea 9 лет назад
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
@JJJr14 6 лет назад
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
@charlottethomas5949 5 лет назад
@@JJJr14 Where did that phantom 40 come from??
@loppyhero7196
@loppyhero7196 5 лет назад
@@charlottethomas5949 That's what I wanna know
@zibusisombasela1711
@zibusisombasela1711 4 года назад
40???🤔🤨
@graffitifreak333
@graffitifreak333 4 года назад
BP-> FC+ DEP/P-VC is this ok with depreciation? Cz thats why my professor said and im confused now 😂
@olodunemmanuel1832
@olodunemmanuel1832 5 лет назад
Thank you
@tobymcrae7058
@tobymcrae7058 7 лет назад
very helpful
@Alanisbusinessacademy
@Alanisbusinessacademy 7 лет назад
Thanks Toby!
@Drea624
@Drea624 4 года назад
@ minute marker 3:39, you state 500,000 divided by ($20 minus “fixed cost” $10) isn’t this the variable??
@mjaber4388
@mjaber4388 6 лет назад
Wow. So i guess if a heart breaks it does breakeven!! The more you know.
@johnnwatson2050
@johnnwatson2050 5 лет назад
(:
@felicitymabuza1280
@felicitymabuza1280 2 года назад
😂😂🔥👏👏exactly
@aitaisakura4281
@aitaisakura4281 7 лет назад
Huh? Why at subject of pricing and management is a bit different..
@discoveringme941
@discoveringme941 4 года назад
Is depreciation a fixed cost?
@JessicaTorres-ht2zb
@JessicaTorres-ht2zb 5 лет назад
please help how did you get your answer
@gizmoff6573
@gizmoff6573 2 года назад
Thx alot
@tchanaalbert9296
@tchanaalbert9296 4 года назад
Now does it mean that if you have many products you could use average price
@ndumisoradebe5256
@ndumisoradebe5256 5 лет назад
Is it possible to determine break even point without number of units produced and sold and price per unit.
@loppyhero7196
@loppyhero7196 5 лет назад
You need the price to determine the revenue
@lethycegwyneth8698
@lethycegwyneth8698 3 года назад
thank u :">
@maureenbennett809
@maureenbennett809 Год назад
Great!😁
@daphneerose8026
@daphneerose8026 Год назад
What if I have multiple products?
@lonemotheomatshaba9640
@lonemotheomatshaba9640 3 года назад
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
@Alanisbusinessacademy 3 года назад
I'm definitely not doing doing your homework.
@lonemotheomatshaba9640
@lonemotheomatshaba9640 3 года назад
@@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
@JesusChristreinzover
@JesusChristreinzover 9 лет назад
I am so sh8cked! I understand !!! Thank u
@Alanisbusinessacademy
@Alanisbusinessacademy 9 лет назад
Monique-Gail Samuels Glad it became clear! Thanks for watching.
@Mr0Hayate
@Mr0Hayate 9 лет назад
whats fixed cost, pls could you elaborate, we were making a business plan and we needed to make a break even point analysis
@Alanisbusinessacademy
@Alanisbusinessacademy 9 лет назад
+Mr0Hayate Thanks for the question. This video should help: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-582lLYfTP08.html
@Mr0Hayate
@Mr0Hayate 8 лет назад
thank you for the reply, this really helped
@kennahycopatience5839
@kennahycopatience5839 8 лет назад
nice
@ghazanfarali6854
@ghazanfarali6854 10 лет назад
How to make this on graph ?
@DerejeTeklu-ip8hh
@DerejeTeklu-ip8hh 7 месяцев назад
Please,free the Footer area to see your excercises
@BarnOwlz
@BarnOwlz 8 лет назад
economic break even please
@motanveer5108
@motanveer5108 6 лет назад
Ben Wyatt would be proud.
@ntcuong01ct1
@ntcuong01ct1 3 года назад
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.
@epiphaniemukasine1184
@epiphaniemukasine1184 11 месяцев назад
I'm confused
@stevemadete7272
@stevemadete7272 5 лет назад
Lol is this Sean McVay..?
@user-lp3zr3oj9z
@user-lp3zr3oj9z 4 года назад
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?
@marycatherine3857
@marycatherine3857 4 года назад
VC cheeers
@successeries
@successeries 4 года назад
you talk a lot unnecessary sir
@nikitamiller2930
@nikitamiller2930 8 лет назад
thank you, this was very helpful
@Alanisbusinessacademy
@Alanisbusinessacademy 8 лет назад
+Nikita Miller Glad to hear that. Thanks for watching and please subscribe.
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