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Break-Even analysis is used to give answers to questions such as ?what is the minimum level of sales that ensure the company will not experience loss? or ?how much can sales be decreased and the company still continue to be profitable?.

When determining a break-even point based on sales dollars: Divide the fixed costs by the contribution margin. The contribution margin is determined by subtracting the variable costs from the price of a product. This amount is then used to cover the fixed costs.

even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs.

even analysis is a financial calculation used to determine a company's breakeven point (BEP). In general, lower fixed costs lead to a lower breakeven point. A business will want to use a breakeven analysis anytime it considers adding costs?remember that a breakeven analysis does not consider market demand.

Uses of Break-Even Analysis: (i) It helps in the determination of selling price which will give the desired profits. (ii) It helps in the fixation of sales volume to cover a given return on capital employed. (iii) It helps in forecasting costs and profit as a result of change in volume.

How to calculate your break-even point Break-Even Point (Units) = Fixed Costs ÷ (Revenue per Unit ? Variable Cost per Unit) Break-Even Point (sales dollars) = Fixed Costs ÷ Contribution Margin. Contribution Margin = Price of Product ? Variable Costs.

Calculating Breakeven Output - Chart Method The first step is to produce two axes: ... The next step is to add the fixed cost line. ... Next we add the variable costs. ... Next step is to add the variable costs to the fixed costs for each level of output. ... Having dealt with costs, we can now draw the line for total sales.