Post by account_disabled on Dec 13, 2023 21:16:45 GMT -7
To calculate the break even point you should first carefully look at the current costs or try to estimate them if the calculations are made for a company that is yet to be established. Costs are divided into two basic categories constant independent of production volume e.g. rent or depreciation variable dependent on the scale of production e.g. wages or material consumption. The first step of the calculation is to calculate the so called the quantitative break even point i.e. the threshold that allows you to answer the question of how many products the company should produce to cover its costs. For this purpose total fixed costs are divided by the margin i.e. the unit price of the product less the unit variable cost.
Knowing the quantitative break even point simply multiply its value by the unit price of the product to obtain the break even point value. In other words the amount of revenue that a company must generate to fully cover all costs incurred. Generating higher revenues Email Marketing List than those determined in this way will mean a profit for the company. How to influence break even point? To control the break even point companies generally have two solutions they can increase sales or reduce costs. The task seems seemingly simple but reality proves that both the first and second variants involve a number of requirements.
Increasing production may theoretically have a positive impact on the company's financial result but only if a larger volume of products can be sold at the assumed price. If sales are made at a lower margin the break even point will take a completely different value. An even worse situation will be if the increased production remains in the warehouse. An alternative solution is to reduce operating costs but in principle the room for maneuver in this respect is very limited.
Knowing the quantitative break even point simply multiply its value by the unit price of the product to obtain the break even point value. In other words the amount of revenue that a company must generate to fully cover all costs incurred. Generating higher revenues Email Marketing List than those determined in this way will mean a profit for the company. How to influence break even point? To control the break even point companies generally have two solutions they can increase sales or reduce costs. The task seems seemingly simple but reality proves that both the first and second variants involve a number of requirements.
Increasing production may theoretically have a positive impact on the company's financial result but only if a larger volume of products can be sold at the assumed price. If sales are made at a lower margin the break even point will take a completely different value. An even worse situation will be if the increased production remains in the warehouse. An alternative solution is to reduce operating costs but in principle the room for maneuver in this respect is very limited.