Breakeven
Analysis
Learning Competency
Determine the break-even point.
It is the volume of sales for
which total sales equals total
costs where profit is equal to
zero.
Components of Break-even
Analysis
The level of production by a
company, which is expressed
as the number of units
(quantity) produced and
sold.
It is the total amount of
income generated by the
sale of goods or services
related to the company's
primary operations.
The usual number of different
costs that must be taken into
account in order to
determine profit.
Expenses
Two Types of Cost
Fixed Cost
Variable Cost
Two Types of Cost
Fixed Cost
It is a cost that is independent of the
volume of units produced. It will remain the
same regardless of the volume of sales.
Two Types of Cost
Variable Cost
It is a cost that is determined on a per-unit
basis. It grows in direct proportion to
the volume of sales.
ACTIVITY
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Break-even Analysis
Formula
x=
𝐹𝐶
𝑆𝑃 − 𝑉𝐶
x = Volume of output or sales in units
FC = Fixed Cost
SP = Selling Price
VC = Variable Cost
Break-even Analysis
Formula
Example
FC = 2,500
SP = 70
VC = 50
Solving
1.
x = 250
FC = 1,000
SP = 15
VC = 11
Solving
2.
x = 14
FC = 3,500
SP = 750
VC = 500
Solving
3.
x = 43
FC = 172,000
SP = 9,000
VC = 5,000
Activity
An artist is makes a Valentine’s
card and sells it for 80.00 pesos
each. Determine the break-even
point if the variable cost per item is
50.00 and the fixed cost is
1,500.00.
What I Have Learned
 Components of break-even analysis
 Two types of cost
 Break-even formula
Short Quiz
Assignment
Identify the recipe of tinola and compute for
its variable cost. After you determined the
variable cost, add 50 pesos mark-up to
determine the selling price. The fixed cost
will be set to 5,000. Determine the breakeven point.
Thank you!