Break Even Analysis

This book explains the vocabulary of cost-volume-profit (breakeven) analysis (CVP), explores the breadth of applications of CVP, and illustrates the use of CVP concepts in a broad range of management and marketing scenarios. The book examines the proper identification of a 'unit', the various formulations of breakeven, profit planning using the breakeven formulas, and the application of CVP in sensitivity analysis. The book is organized into six units: introduction to the basic concepts and simple methods; contribution margin methods; multiple product line methods; mixed-cost methods; methods to deal with uncertainty, and; special topics. The chapters are arranged in a progression from less difficult towards more difficult. Even so, each chapter stands alone so that the reader can read a chapter out of order and still gain value. Each chapter will offer several important ingredients for a practical 'how to' approach: the type of data needed, the formula, how to calculate and interpret the math, a specific example followed by a brief review of the assumptions and limitations of that method.