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The Finance Plan
Published in David C. Kimball, Robert N. Lussier, Entrepreneurship Skills for New Ventures, 2020
David C. Kimball, Robert N. Lussier
While the pro forma cash flow and pro forma statements may show your business to be profitable, it is helpful to know the point at which you actually began to make a profit. A useful tool to determine this point is breakeven analysis. Breakeven occurs when the volume of sales is sufficient to cover all fixed and variable costs; it is the point at which revenues equal costs. The breakeven point is that point at which the company neither makes a profit nor sustains a loss. At this point sales revenues equal the costs (expenses) necessary to generate them. This is useful information because the breakeven point also tells you the minimum level of sales you need to start or continue to operate. In addition, it illustrates the relationship between costs and revenue volume. As long as your forecasted sales are greater than the breakeven point, you may stay in business. If projected, or actual, sales drop below this point, you might decide against starting or continuing the business.
Economic and Cost Factors of Bioprocess Engineering
Published in Kenneth E. Avis, Vincent L. Wu, Biotechnology and Biopharmaceutical Manufacturing, Processing, and Preservation, 2020
Operating expenses are those costs required for product manufacture. These include such things as raw materials, utilities, labor, royalties, depreciation, insurance, rent, and overhead. Items for which the total expense varies with production volume are called variable (or direct) expenses; items that remain constant, independent of production volume, are known as fixed (or indirect) expenses. The point at which the combined fixed and variable expenses equal revenue is called the breakeven point, as shown in Figure 7.7. Profit is represented by the area bounded by the revenue line, the total expense line, the breakeven point, and the production rate. The prime cost drivers tend to be raw materials, labor, depreciation, and other fixed costs. Generally, because of the impact of fixed costs, including depreciation, on the cost of manufacturing, and as a result of the economies of scale that are realized with larger equipment, the lowest unit cost is achieved with the largest volume operation. In some cases this may lead to a facility shared by multiple, small-volume products.
Cost and production analysis
Published in Bijan Vasigh, Ken Fleming, Thomas Tacker, Introduction to Air Transport Economics, 2018
Bijan Vasigh, Ken Fleming, Thomas Tacker
Understanding the breakeven analysis is essential for any type of financial planning. Breakeven point is the number of units or revenue required in order for the firm’s costs to be recovered. By breaking even, an airline is not losing any money, but with the same token is not making any money. Profit = Total Revenue − Total Cost At breakeven point: Revenue = Fixed Costs + Variable Costs P × Q = FC + VC × Q FC = (P – VC) × Q
Life cycle cost analysis of a built-in guide-type robot for cleaning the facade of high-rise buildings
Published in Journal of Asian Architecture and Building Engineering, 2022
Dong-Jun Yeom, Ju-Hak Kim, Jun-Sang Kim, Young Suk Kim
The breakeven point is time at which the present value of the generated benefit is equal to that of the generated cost. The profit owing to utilization of the cleaning robot occurs after the breakeven point. As presented in equation (4) and Figure 14, the breakeven point of the automated method was found to be 16.52 years.