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  • Break-Even Analysis: in Decision Making, The Firm Is Interested in

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    Sweta Patil
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    Break-even analysis helps decision makers determine the sales volume needed to maximize profits or minimize losses. It identifies the optimal price, cost, and output for each product by calculating the break-even point, which is the level of output where total revenue equals total cost. The formula for calculating break-even point is: Break-even Point = Total Fixed Cost divided by the Price per unit minus the Average Variable Cost per unit.

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    BEP

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    Break-even analysis helps decision makers determine the sales volume needed to maximize profits or minimize losses. It identifies the optimal price, cost, and output for each product by calculating the break-even point, which is the level of output where total revenue equals total cost. The formula for calculating break-even point is: Break-even Point = Total Fixed Cost divided by the Price per unit minus the Average Variable Cost per unit.

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    7 views3 pages

    Break-Even Analysis: in Decision Making, The Firm Is Interested in

    Uploaded by

    Sweta Patil
    Break-even analysis helps decision makers determine the sales volume needed to maximize profits or minimize losses. It identifies the optimal price, cost, and output for each product by calculating the break-even point, which is the level of output where total revenue equals total cost. The formula for calculating break-even point is: Break-even Point = Total Fixed Cost divided by the Price per unit minus the Average Variable Cost per unit.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 3

    BREAK-EVEN ANALYSIS

    IN DECISION MAKING, THE FIRM IS INTERESTED IN FINDING OUT THE SALES VOLUME WHICH WILL BRING MAXIMUM PROFITS OR MINIMUM LOSS.

    BREAK-EVEN ANALYSIS HELPS THE DECISION MAKER IN THE CHOICE OF OPTIMAL PRICE, COST AND OUTPUT FOR EACH PRODUCT.

    3/11/12

    BREAK-EVEN ANALYSIS IS ALSO CALLED COST-

    COST & REV

    TR
    TC

    ANGLE OF INCINATION

    Click to edit Master subtitle style

    TFC

    O
    3/11/12

    BEP

    OUTPUT

    FORMULA

    TR = TC P*Q = TFC + AVC*Q P*Q AVC*Q = TFC Q [P AVC ] = TFC Q = TFC / [P AVC ]
    3/11/12

    TR = P*Q TC = TFC + TVC TVC = AVC*Q

    BEP = TFC / [P AVC ]

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