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The break-even point (BEP) or break-even level represents the sales amount—in either unit (quantity) or revenue (sales) terms—that is required to cover total costs, consisting of both fixed and variable costs to the company. Total profit at the break-even point is zero.
5. Impractical to assume sales mix remain constant since this depends on the changing demand levels. 6. The assumption of linear property of total cost and total revenue relies on the assumption that unit variable cost and selling price are always constant. In real life it is valid within relevant range or period and likely to change. [2]
In nuclear fusion research, the term break-even refers to a fusion energy gain factor equal to unity; this is also known as the Lawson criterion. The notion can also be found in more general phenomena, such as percolation. In energy, the break-even point is the point where usable energy gotten from a process equals the input energy.
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
When price goes up, quantity will go down. Whether the total revenue will grow or drop depends on the original price and quantity and the slope of the demand curve. For example, total revenue will rise due to an increase in quantity if the percentage increase in quantity is larger than the percentage decrease in price.
Some retailers use margins because profits are easily calculated from the total of sales. If margin is 30%, then 30% of the total of sales is the profit. If markup is 30%, the percentage of daily sales that are profit will not be the same percentage. Some retailers use markups because it is easier to calculate a sales price from a cost.
In Cost-Volume-Profit Analysis, where it simplifies calculation of net income and, especially, break-even analysis.. Given the contribution margin, a manager can easily compute breakeven and target income sales, and make better decisions about whether to add or subtract a product line, about how to price a product or service, and about how to structure sales commissions or bonuses.
The square brackets contain the cost of goods sold, wq not cost of good made wx where x = cost of good sold. To show cost of good sold, the opening and closing finished goods stocks need to be included The profit model would then be: Opening stock = g o w = opening stock quantity × unit cost; Cost of stock = g 1 w = closing stock quantity × ...