Professional Documents
Culture Documents
Breakeven Analysis PDF
Breakeven Analysis PDF
Proprietary Material
© K.E. Homa
Breakeven Analysis
• A method for calibrating the uncertainty associated with a decision
VOLUME
Fixed Costs
• For simplicity, typically assumed to be
constant across broad volume ranges
Breakeven Analysis
Fixed Cost
VOLUME
Variable Costs
• For simplicity, typically assumed to be
constant on a per unit basis
Variable Cost
VOLUME
Breakeven Analysis
Variable Cost
Fixed Cost
VOLUME
Breakeven Point
Variable Cost
Fixed Cost
B/E VOLUME
Adding some complexity …
Fixed Costs
• For simplicity, typically assumed to be constant
across broad volume ranges
Fixed Cost
VOLUME
Breakeven Analysis
Variable Cost
VOLUME
Breakeven Analysis
$
Variable Cost
Fixed Cost
VOLUME
Breakeven Analysis
Variable Cost
Fixed Cost
B/E VOLUME
Breakeven Point
• The quantity at which
revenue equals total cost
• Fixed costs
…Corporate, regional, operation
• Semi-fixed
…Constant over a range of volume
• Variable
…Dependency relationships
(not always sales volume !)