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For instance you are an advertising executive and just after initiating your unique commercial, the sales of your cola drink jumps to $1 million dollars. Is that a decent outcome? Yes?
In fact, you definitely don’t know! What are the reasons? What if you exhausted $1 million dollars in advertising costs and also the ingredients and container of this cola soda also cost $1 million dollars, to find a total of $2 million? You will have earned $1 million dollars, but will have invested $2 million dollars on advertising in addition to “cost of goods.” Furthermore, one would still seek to join the expenses of the business enterprise like rent, salaries, etc.
Therefore, what quantity should your advertising grow sales before we are able to assume that the excess sales you observed from advertising is sufficient to at any rate pay for your complete costs and expenses? Maybe $2 million? $3 million? What quantity exactly?
This is actually the principle of “Break Even.” A corporation break even point is the precise amount of sales that you need in which the money may possibly be merely enough to pay for your costs and expenses. Whereas, a task’s (ex. An advertisement’s) break even point is exactly where the rise in sales added by way of the new undertaking is ample to fund the additional costs and expenses brought by that new scheme. Recognize that achieving break even does not mean you are receiving a profit though either; like I reported previously, it only means you find yourself making enough to pay for your costs and expenses.
Accordingly, so as to produce a profit, you’d need to 1) produce more sales so that you will go beyond the break even point, and/or 2) improve your merchandise’s “contribution margin.” Precisely what is contribution margin? It happens to be the difference between the price that you intend to deal in your merchandise and your “variable costs.” Variable costs are costs which aren’t “fixed” (fixed costs are things like fixed rent and flat compensations which may not climb regardless of whether you generate and/or sell more products or services). For this reason, contribution margin is different from “profit” for the reason that once we compute profit, we integrate fixed costs and overhead.
Cost Volume Profit Analysis, on the other hand, is definitely parallel to but bigger than Break Even Analysis, as it carries going more than just figuring out how much to sell with the intention to cover costs and expenses. With cost volume profit analysis, we likewise try to resolve how much we might sell if we want to reach a certain target profit, in which we take into account taxes as well.
breakeven, break even analysis, cost volume profit analysis, what is break even analysis
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goooddd ty
Thank you for this tutorial, it's really hard for me to understand math thing but this literally helps me a lot 😊🖤
Yow hellow 2020, advance hello 2021
How to calculate break even Analysis in social media platform??
now i understand it! ty man
Thank you very much
thought u were trolling dude but man do i understand everything and u explain better than my teacher thx dude.
Best BEP tutorial i've ever listened n watch.. makes me forget the sound is aahhh!!
Do we need to minus Selling and administration expenses from Sell price ?
Thank you so much
Thanks so much Sir.
Thanks.. I understood before the video was over… Even with bad sound quality..😂😂
Thank you. T H A N K Y O U. Spell it right. T H A N K Y O U.
Nice explanation sir
yu make it easy thanx
Thanks sir
From india
Thank you very much, i found this very simplest way to understand, i got it..
Fuck those lectuers , always make it confuse and complicated ..Thanks for made this video .. i hate math !!
If I open a shop and I sell different kinds of products then how to find out
79 dislikes. What's wrong with you people. Click the like instead!!!!!
Thank u
Thumbs up on this. I thought I would lose 15 minutes of my life learning this equation instead you taught it 7. Good work.
You are the best man…..Good explanation and now i have an idea
Thank you so much!!
thumps up sir👍👍
Thannk you .it helps in bank exam life seat.
thank u very much for ur help
in other words, the spread between sales and variable must equal fixed cost. 100=7x. thanks
Thank you man!
Perfect, it FINALLY makes sense. Thank you !
So, I can say the $10 is my gross revenue or gross sales value. Will that be correct?
Thank you so much!!!!!
awesome explanation. i love u
is it the total variable cost we are using or variable cost of raw material per unit?
Very Nice…
Thanks dude.
hey bro just wanted to ask is gross margin per unit and contribution per unit not the same thing?. p.s. love your vids keep up the good work
The cost of all items sold by Guzmart office suppy during the month of june is 95,000.00. The overhead is 50,000.00. What is the breakeven point?
On ya mate!
It was super lecture,I really appreciate it.Thanks for it.
Informative! Enjoyed watching the video 🙂
thanks, your video help me a lot
enough to understand
Selling price per unit(x) -fixed cost=cost per unit(x)
This is an another method when you figure out the x you will get the break even point with unit
Using the answer of x times the selling price per unit you will get the break even points with volume