How to Conduct a Breakeven Analysis

One of the tools that companies utilize to set prices is the breakeven analysis. This analysis helps companies determine the number of product units they would need to sell to cover their variable and fixed costs. In this brief video,​ I'll walk you through how to calculate the breakeven point.

[Zohirul-Jewel]

BP = Break-even point
FC = Fixed cost (cost of running the business stays the same regardless of the mount of products produced)
P = Price
VC = Variable cost (cost of making the product)

[elizabethm.]

You saved me a lot of grey hairs. The Advanced Algebra book that I am using now is extremely complicated when explaining the "formulas" ; which are different than your easy and simple formula you gave in your video. I understood what the BP was, but the steps in this book was like a gibberish.

[tashibalampkin]

Thank you so much. I was doing my homework when I realized my professor didn't even cover how to find the breakeven point.

[clementine]

Break Heaven sent! I was working on an assignment and my teacher being great, I still couldn't have a clearer formula for Breakeven point with all the material given I explored, and let's say it, video learning is my thing, I am a visual person before all!

[georgegt]

2:46 utimately you are going to take your VC and multiply it by 5. you done great job sir

[growthclassmedia]

Thanks for this video. Never actually thought of advertising as a "fixed" cost.

[josierebellato]

This channel is super. Thank you for explaining in simple terms. well done.

[TellAfrica]

Thanks. You simplified things for me. I finally got it

[kimglover]

This is SO simple! Thank you so much, you're a life saver!

[MayweatherjrWONandsoTrump]

Thank you, it did simplified the process.  Wish I had a Professor like this one. 

[mitchkwok]

Thank you! I used this to review for my finals! You explained it clearly :)

[esraaashraf]

A plant manufactures wooden pallets has the capacity to produce 250, 000 pallets / year . Presently the plant is operating at 60 % of capacity . The average selling price of a pallet is $ 25 with a variable cost of $ 20 . At zero output, the plant's annual fixed costs are about $ 800, 000 and are approximately constant up to the maximum production quantity per year . a - With the 60 % of capacity production, what is the expected annual profit or loss for the plant ? b - What annual volume is required in order for the plant to break even ? C- What would be the annual profit or loss if the plant were operating at 80 % of capacity ?

[clvfiiiooo]

May I ask if what should be the formula used for finding variable cost if you are given the fixed cost price per unit and break-even point. Thanks!

[adamdelduca]

You have a mistake around 2:50 you say FC go up with more production. I think you meant VC. Cheers

[Carrmistr]

I start my operations management class in the summer so this was very helpful!

[AnnaMuzaza]

Very simple and straightforward’ thank you!

[lilianmogoah]

This just made my life easier! Thank you

[jewelpolicarpio]

Well, I'm here for our Feasibility Study. Hahahaha and it helps a lot! Thank you💛

[Drea]

@ minute marker 3:39, you state 500, 000 divided by ($20 minus “fixed cost” $10) isn’t this the variable??

[sandilesyandamkhize]

Thank you. Very useful especial for a discussion question