Break-Even Output:  = 0 Total Revenue = Total Cost (= Fixed + Variable Cost) PQ* P: Price UC: Variable Cost per Unit Profit (  = Total Revenue – Total.

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Presentation transcript:

Break-Even Output:  = 0 Total Revenue = Total Cost (= Fixed + Variable Cost) PQ* P: Price UC: Variable Cost per Unit Profit (  = Total Revenue – Total Cost = F + (UC)Q* PQ* - (UC)Q*= F (P - UC)Q*= F P - UC: Gross Margin Q* = F (P - UC) F = Lt10.000P = 20 Lt/kg UC = 15 Lt/kilo Q* = ( ) = kg Example: BREAK-EVEN ANALYSIS    

Output (Q) Litas Total Revenue Total Cost Total Fixed Cost Q* F Break-Even Output P: Price = F + (UC)(Q) UC:Variable Cost per Unit = (P)(Q) QoQo  <0  Profit (  = Total Revenue – Total Cost  >0 QoQo

Profit Contribution = Profit Volume – Specific Program Costs  C = [(P-UC)/P] S – SPC = [.25]S – S* = SPC (P-UC)/P S* = ( )/20 = Lt8.000 PROFIT-CONTRIBUTION & BREAK-EVEN Profit Volume =  V = (P)Q - (UC)Q = (P – UC)Q Sales = (P)Q   V = (P – UC) S P If P = Lt20/kg UC = Lt15/kg SPC = Lt2.000   V = [(20 – 15)/20]S = [.25]S

PROFIT-CONTRIBUTION & BREAK-EVEN Profit Contribution (Litas) Sales Volume/week (Litas) CC =[.25] – =  C = [.25]S – S* S* = [2.000]/.25 = 8.000

PROFIT-CONTRIBUTION & BREAK-EVEN Profit Contribution (Litas) Sales Volume/week (Litas) CC =[.33] – =  C = [.33]S – S* S*’ = [2.000]/.33 = C’C’ S*’