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  • Break Even Point

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    keshav maniyar
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    The document discusses break even analysis and how it relates to costs, revenues, and profits. It provides illustrations of break even charts showing the relationships between total costs, total revenue, fixed costs, and the break even point. It notes that higher or lower prices do not necessarily mean break even cannot be reached, as break even depends on sales volume needed to cover costs. The document also discusses how break even relates to pricing strategies like penetration pricing and market skimming, as well as the concept of elasticity.

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    The document discusses break even analysis and how it relates to costs, revenues, and profits. It provides illustrations of break even charts showing the relationships between total costs, total revenue, fixed costs, and the break even point. It notes that higher or lower prices do not necessarily mean break even cannot be reached, as break even depends on sales volume needed to cover costs. The document also discusses how break even relates to pricing strategies like penetration pricing and market skimming, as well as the concept of elasticity.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    1 views6 pages

    Break Even Point

    Uploaded by

    keshav maniyar
    The document discusses break even analysis and how it relates to costs, revenues, and profits. It provides illustrations of break even charts showing the relationships between total costs, total revenue, fixed costs, and the break even point. It notes that higher or lower prices do not necessarily mean break even cannot be reached, as break even depends on sales volume needed to cover costs. The document also discusses how break even relates to pricing strategies like penetration pricing and market skimming, as well as the concept of elasticity.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 6

    Costs and Budgeting

    Break Even
    Break Even Analysis
    TR
    Costs/Revenue TC
    Y
    Profit

    Loss
    FC

    X
    Q Output/Sales
    Break Even Analysis TC

    Costs/Revenue
    Y

    BEP Loss
    Profit
    E

    TR

    Loss
    FC

    X
    Q Output/Sales
    Break Even Analysis
    • Remember:
    • A higher price or lower price does not mean that
    break even will never be reached!
    • The break even point depends on the number of
    sales needed to generate revenue to cover
    costs – the break even chart is NOT time
    related!
    Break Even Analysis
    • Links of break even to pricing strategies and
    elasticity
    • Penetration pricing – ‘high’ volume, ‘low’ price –
    more sales to break even
    • Market Skimming – ‘high’ price ‘low’ volumes –
    fewer sales to break even
    • Elasticity – what is likely to happen to sales
    when prices are increased or decreased?

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