Question: Where is that breakeven point?
Breakeven analysis seems to be a pretty easy concept. People talk about it all the time as if it is straight forward and easy to understand. Often, there are cases where businesses, particularly small businesses, miscalculate and fail to make their easily anticipated breakeven points.
The following video is a humorous example of potential obstacles that businesses may encounter when calculating a breakeven point that may assist you as you answer the above question.
• Films On Demand. (1982). Cost, Profit and Break-Even: Classic John Cleese Business Education Videos (Links to an external site.)Links to an external site.. [Video File 21:46 mins].
This discussion will address the following Module Outcomes:
• MO2: Analyze the cost, profit, breakeven, and payback periods for a business investment. (CO2, CO6)
Before participating in the discussions, review The School of Business and Technology Discussion Guidelines ..
In this module, you have read about how to determine fixed and variable costs, break-even points, contribution (revenues), depreciation, marginal costs, and total absorption costing. Keep in mind each of these concepts as you address this discussion activity.
Respond to the following questions based on your reading and the video you just viewed:
• What are the most common failures of businesses to properly prepare or consider when to achieve their prior calculated breakeven points? Explain why.