# BREAKEVEN POINT ANALYSIS

Get Started. It's Free
or sign up with your email address
BREAKEVEN POINT ANALYSIS

## 1. External Reporting

### 1.4. Variable Cost

1.4.1. 1) Cost which varies in total but fixed in per unit bases 2) The changes in total variable costs is directly proportional to the units produced or sold 3) Direct material, direct labor, variable overhead and variable selling and admin expense

### 1.5. Fixed Cost

1.5.1. 1) These are costs that are fixed in total but will vary in per unit basis. The changes in unit variable cost is indirectly proportional to the units produced or sold. 2) Fixed Overhead and Fixed selling and Admin Expense

## 2. Internal Reporting

### 2.2. 1. Equation Method or Algebraic Method

2.2.1. TOTAL SALES- TOTAL VARIABLE COST- TOTAL FIXED COST= NET INCOME ((UNIT SELLING PRICE- UNIT VARIABLE COST) x UNIT SOLD)-FIXED COST= NET INCOME (UNIT CONTRIBUTION MARGIN x UNITS SOLD) – FIXED COST- NET INCOME

### 2.3. 2. Formula Method

2.3.1. Breakeven Point (units) = Fixed Cost/ Unit Contribution Margin Breakeven Point (Pesos) = Fixed Cost/ Contribution Margin Ratio Sales (Units) = (Fixed Cost + Desired Income)/ Unit Contribution Margin Sales (Pesos) = (Fixed Cost + Desired Income)/ Contribution Margin Ratio Sales (Units) = (Fixed Cost + Desired Income/1- Tax Rate)/ Unit Contribution Margin Sales (Pesos) = (Fixed Cost + Desired Income/ 1- Tax Rate) / Contribution Margin Ratio