Dear Sir, the break even point is a a technique widely used by production management and management accountants. It is based on categorising production costs between those which are "variable" and "Fixed".
The Fixed cost is ( costs not directly related to the volume of production, but it drive from th other costs like advertising, accounting legal, depreciation, interest expense, insurance, manufacturing, payroll, rent, supplies, taxes, utilities ). And the variable cost is ( costs that change when the production output changes ). Each project or company in first level of his life should break down the break even point and jump up it, to start the real work.
Break-Even-Point Report
DATE: 13/6/2010
TO: Dr. Maher Arafat
FROM: ahmad jawdat abuoun
SUBJECT: Break-Even-Point Report
Dear Sir, the break even point is a a technique widely used by production management and management accountants. It is based on categorising production costs between those which are "variable" and "Fixed".
The Fixed cost is ( costs not directly related to the volume of production, but it drive from th other costs like advertising, accounting legal, depreciation, interest expense, insurance, manufacturing, payroll, rent, supplies, taxes, utilities ). And the variable cost is ( costs that change when the production output changes ). Each project or company in first level of his life should break down the break even point and jump up it, to start the real work.
- The break even point equations are :
1- Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs) .
2- Unit Contribution Margin = Sales Price - Variable Costs .
Look at Figure 1 ||
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Figure 1 - break even point chart