The horizontal The formula for the calculation will help you understand how much you ne to sell in order to cover all variable and fix costs and make a profit. To calculate the break-even point in monetary terms, you ne to: As before, first calculate the fix costs. Then calculate the variable costs for the entire volume of manufactur products. Next, you ne to calculate the overall margin using the formula: “Revenue” – “Variable Costs”. Find TBU using the formula.
This formula can also be shorten and present as
Break-even point = Fix costs / Marginality. Let’s look at an example to understand how to find TBU. It is convenient to calculate the break-even point in Excel. There poland phone number library you can set up formulas and periodically update the data, Excel will calculate everything automatically. Breakeven Point Graph Another way to determine the break-even point of an enterprise is a graphical one. It is consider more convenient and visual, so many entrepreneurs are us to working with it.
Of products sold in physical terms
The vertical axis shows all business expenses in monetary terms and revenue. The graph may look like this: There are several features of constructing such graphs. Let’s consider how to visualize the breakeven point. 1) To calculate the break-even point, it is necessary to construct a line of fix costs. It is parallel to the X-axis and is not deriv from the zero coordinate. In the picture, it is a r line that comes out of the value “1000”.
This means that all fix costs of
The company are equal to 1000 conventional units. Therefore, if the business cannot sell a single product, the company will still bear some of the costs. This ad words or social media platforms is the payment of fix costs. 2) Next, variable costs are identifi. This is a straight line that starts from the zero coordinate and goes up. In the picture, this is the orange line. 3) After this, we construct a line of total costs.
This is the sum of all fix and variable costs
The line starts from the starting point of fix costs and moves buy lead parallel to variable costs. In our example, this is the purple line. 4) At the end, we draw a line that corresponds to the revenue for the reporting period. In our example, this is the green line, which, like variable costs, comes out of the zero coordinate. The break-even point is the intersection of the total cost and revenue lines. Everything to the left and below the point is the company’s losses.
