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Break even analysis is used to determine when a business will be able to cover all the expenses incurred and start making profit. To complete an assignment on break even analysis a student need to learn the basics in detail. Due to lack of proper knowledge they might face difficulties in delivering the correct assignment. But not to worry as break even analysis assignment help is there to help you.
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Break even analysis
Break Even point is that point in business where total revenue and total cost is equal. In other words, it is the volume of sales that just allows covering the expenses incurred. Expenses include both the fixed and variable charges. Thus, there is no profit or no loss in the business at a breakeven point. It basically studies and views relationship in sales management, profits and costs of a business.
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Formula’s for break even analysis
The break even analysis can be calculated using two formulas. First, the total fixed cost is divided by the unit contribution margin. For example, if a fixed cost of a company is Rs 2, 00,000 with a contribution margin of 40,000 then the breakeven point would be 500 units. Secondly, it can be calculated by dividing the total fixed cost by the contribution margin ratio. Contribution margin is basically sales minus variable expenses. When the contribution margin is expressed as a percentage of sales it is termed as contribution margin ratio.
Importance of Break even in business
A company must generate enough revenue to cover start-up costs, fixed costs and variable costs before earning profit. The faster a breakeven point is achieved in business, the sooner it can earn profit and pay off debts tied to the investment.
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