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Implementation / Plan of Action:: Break-Even Point
Implementation / Plan of Action:: Break-Even Point
The business needs a financial investment before the business starts its works in most of the cases. When the works begins, it
may take time and many sales before the business achieves profitability. Even when the business doesn’t works much and is with
a loss but yet the business can earn profit through business’s break-even point.
Break-even Point
All of its fixed assets and expenses can be covered as the business’s sales have generated enough income is called as break-even
point. Until and unless there is no increase in the expenses and cost and reduction in the sales amounts, all the business incoming
revenue is with profit at this point.
The break-even point can be calculated as to divide the business fixed expenses by its margin. We need to subtract the business’s
total variable expenses from its total sales amount then only we can determined the margin of the business. The margin shows the
percentage of revenue that maintains after the business pay offs all of its expenses. The total profits after expenses represents the
margin of the business. We need to add the business’s total costs of goods sold to the selling expenses to get the business’s total
variance expenses. The business income statement is required to determine the business’s break-even point , earning statement or
profit and loss statement is also referred to calculate the business break-even point.
The financial resources such as fixed costs and variable costs are required in order to calculate breakeven point and it is long term
tasks to guide the implementation process.