Break Even Analysis is the critical part of a good business plan. It can also very useful to help program manager and senior management to make many key decisions in the company whether it would be worth to pursues their businesses. Break even analysis tool will help your company to determine if an idea is worth pursuing.
After your company is starting, it can remain helpful as a way to figure out the best pricing structure to forecast the future of the company and compete against the competitors. The break-even analysis tool (BEAT) was developed by the author, Dr. Minh Nguyen to study the relationship between total cost, total sales, profit and fixed costs. It was developed to answer the question what would happen if one of those factors as related to cost, sales, profit and fixed costs are changed?
The webinar provided students with an overview of break-even analysis tool (BEAT) key elements such as: break even analysis over, break even analysis important factors, break even analysis applications, understand the unerline assumptions that used in the analysis, break-even analysis formula and computation, intepret and understand multiple scenario, last but not least understand the break even analysis model.
Break even analysis give us the results that we want if we take the steps and perform the calculation properly. Managers rely on break even analysis to set a price for their organization and to understand the economic condition that impact the various price-sales-volume scenario. Break even analysis is also helping the organization to figure out the various inputs on your product and multiple variable factors which related to revenue, costs, and output sold impact the business profitability of the organization
Overall, with a lot of fluctuation that we face with in the dynamic market today. BEAT still continue to remain critical and crucial for the project to be successes because it can help project manager to be able to interpret the relationships among fixed-costs, sale volume, variable cost, total cost, total sales, and sale price. Senior management will be able to make accurate decisions when determining whether they need to buy, lease, or expand a new area of their business operation.
Author: Minh Nguyen
This article is a summary of a webinar "Break Even Analysis Tool" which was held on July 2, 2018.