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Breakeven Analysis: Engineering Economy
Breakeven Analysis: Engineering Economy
Breakeven Analysis: Engineering Economy
Breakeven Analysis
Buying is better
Variable cost: vQ
Fixed Cost: FC
Savings : S = BC – MC = pQ – FC – vQ
Breakeven: S = 0, pQ = FC + vQ
Quantity (Q)
Q
’
Break-even
maximum Break-even
output
savings output
Fixed Cost: FC
p = (a – bQ)
Savings (S) = pQ – FC – vQ = (a – bQ)Q – FC – vQ
S = aQ – bQ2 – (FC+vQ)