Of all the financial analysis that is the greatest. The break-even analysis helps to know exactly what your point in the business process to start earning money or to make negative, point of sale income will make a loss.
It is expected that the volume of sales prices as necessary to recover the full cost. In other words, the level of revenues that the line between operating at a loss and therefore the costs of management in a profit.
Expressed as a formula, break evenThe point is:
total overheads (expenses) / Gross Profit%
or Example
Your purchases are $ 10, 000.00, of which there are no stocks left. Therefore, the cost of goods sold was $ 10 + $ 300.00 $ 100.00 000.00 packing and transportation of the material you bought, been obtained. Total cost of turnover is $ 10, 400.00, all inclusive.
You know that your brand is your product 100% of the purchase price. So that the sales value of $ 20, 000.00.
Revenue and expenditureStatement
PROFIT
Sales 20,000.00
Cost of sales
Dimensions (direct) cost of goods sold 10,000.00
Less other direct costs 400.00
Total cost of sales 10,400.00
Gross Profit 9,600.00
Expenditure
Tax Admin 500.00
Tax Accounting 200.00
Advertising 450.00
Electricity 350.00
Rental1,500.00
Telephone 750.00
Salaries 3,250.00
Total expenditures 7,000.00
Profit before tax 2600.00
The income and education expenditure in possession of valuable information, especially when you see the detailed schedule for this priority. In this example, we deal only with "summary information. Often we must deepen and ask how many ofdifferent products have been sold, which made the cost of the individual. These aspects are particularly important if you sell or produce different products.
Gross profit is, revenues from sales and services, less the direct costs relating to products sold or services provided. Gross profit is also contributing to the costs (overheads), that funds remaining to cover the overhead costs of managing and operating costs known.
To calculate the breakeven point, you must click oncalculates the gross profit percentage. Your gross profit percentage is calculated as follows:
calculation of gross profit% (gross profit / sales) X 100
% Gross profit = (9,600.00 / 20,000.00) x 100
= 48%
Profits and losses from the sample, you will notice that the costs of spending and management, total $ 7,000.00.
Expressed as a formula is the breakeven point:
total overheads (expenses) / Gross Profit%
The calculation of the break-even point:
total overheads$ 7,000.00 / 48%
Break Even Point = $ 14,583.34
Consequently, make a draw, zero profit, to recover all costs and operating costs, you must make at least one turnover R14.583.34 month. This premise is true, while keeping costs and expenses remain the same in relation to each other. But as long as your gross profit percentage will remain unchanged, the method of calculation will always be faithful, even if the value of break-even point changes.
ISuggest that you try to collect this calculation with a number of different scenarios in your own business with some experience.
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