IE 455: COSTING AND BREAK-EVEN ANALYSIS

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 OBJECTIVES OF THE COURSE
➢ Explains the technicalities of cost-volume-profit (CVP) (breakeven)
analysis
➢ Explores the breadth of applications of CVP, and illustrate the use of
CVP concepts in a broad range of management and marketing
scenarios.
➢ Examine 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. 2
 OBJECTIVES OF THE UNIT
• After completing this unit, students should be able to:

• Define break-even point(BEP) and discuss why it is important

• Determine BEP and what methods are used in its estimation

• Undertake cost-volume-profit and how companies use it CVP to aid decision making.

• Discuss how break-even and CVP analysis differ for single-product and multiproduct firms

• Discuss how margins of safety and operating leverage conepts are used in businesses

• Understand the underlying assumptions of CVP analysis.

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 OVERVIEW OF UNITS
• Unit 1
• Introduction to Break-even Analysis
• Income Statement
• Simple Break-even point analysis
• Break-even point for mult-products
• Break-even point in the Service Industry
• Operating Leverage
• Discounts and Promotions

• Unit 2- Cost Etimation

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 RECOMMENDED TEXTS
• Gregory K. Mislick and Daniel A. Nussbaum (2015), Cost Estimation: Methods and Tools, John Wiley & Sons, New Jersey and
Canada

• Diego Galar, Peter Sandborn and Uday Kumar, (2017)Maintenance Costs and Life Cycle Cost Analysis, CPC Pres, Taylor and
Francis Group, London and New York

• Len Holm (2019), Cost Accounting and Financial Management for Construction Project Managers, Routledge, Taylor & Francis
Group: London and New York

• Joh Vail Farr and Isaac Faber, (2019) Engineering Economics of Life Cycle Cost Analysis, CRC Press, Taylor and Francis Group,
London and New York

• Nikolaos Tsorakidis; Sophocles Papadoulos; Michael Zerres; Christopher Zerres, (2014) Break-Even Analysis, 1st Edition,
Bookboon.com

• Breakeven Analysis: The Definitive Guide to Cost-Volume-Profit Analysis, 2010 by Michael Cafferky, Business Expert Press.

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 COURSE ASSESSMENT

• 30% Continuous Assessment: comprises, assignments, presentations, mid-

semester examination

• 70% End of Semester Examination

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 BREAK EVEN POINT- AN INTRODUCTION
• All businesses have an ultimate goal of maximizing shareholders wealth-
profit.
• There is, however, no obvious or single course of action that leads to
fulfillment of that goal.
• Consequently, managers must choose specific courses of action and
develop plans and controls to pursue that goal.
• Much of the information managers use to plan and control reflects a
relationship among product cost, selling price and sales volume.
• Changing one of these essential components in the mix will cause
changs in other components.

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 BREAK EVEN POINT- AN INTRODUCTION

• Understanding these relationships helps in predicting future conditions

(planning) as well as in explaining, evaluating, and acting on results
(controlling).

• Before generating profit, a company must first reach its break-even

point, which means that it must generate sufficient sales revenue to
cover all cost. Then, by linking cost behavior and sales volume,
managers can use the cost-volume-profit model to plan and control.
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 BREAK-EVEN ANALYSIS: AN INTRODUCTION
• Break-even Analysis is the study of cost-volume of production profit (CVP)
relationship.
• Profit mainly depends upon three factors:
• Amount of input
• Cost of production
• Sales revenue
• Cost of production is the sum of two costs: variable cost and fixed cost.
Fixed cost are assumed to be constant at all levels of output. e.g. Expenditure on permanent
labours and overheads (administrative cost).
Variable cost increases with the increase of output of production i.e. (material cost ,
inventory cost etc.)
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 BREAK-EVEN ANALYSIS: AN INTRODUCTION
Other relevant terminologies
• Revenue: money realised from the sale of goods produced or purchased

• Contribution Margin (CM) per unit equals selling price per unit minus
total variable cost per unit, which includes production, selling, and
administrative cost.

• Total CM is the difference between total revenue and total variable cost
for all units sold.

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 BREAK EVEN ANALYSIS: AN INTRODUCTION
• One of the techniques to study the total cost , total revenue
and output relationship is known as Break Even Analysis.
• Hence, Break Even Analysis is the study of cost, volume of
production and profit relationship.
• It is an analysis to study the point where neither profit nor loss
is occurred.
• This point is known as Break Even Point. 11
 BREAK EVEN ANALYSIS:INTRODUCTION
• Break-Even Point (B.E.P.) is determined as the point where total income from sales
is equal to total expenses (both fixed and variable).

• It is used to give answers to questions such as:

• “what is the minimum level of sales required to ensure the company will not
experience loss?”
• or “how much can sales be decreased and the company will continue to be
profitable?”.

• Break-even analysis is based on categorizing production costs between those which

are variable (costs that change when the production output changes) and those
that are fixed (costs not directly related to the volume of production). 12
 BREAK EVEN ANALYSIS: AN INTRODUCTION
• Examples of fixed costs: administrative costs, rent, overheads,
depreciation

• Examples of variable costs: production wages, raw materials,

sellers’ commissions

• Total variable and fixed costs are compared with sales revenue in
order to determine the level of sales volume, sales value or
production at which the business makes neither a profit nor a loss
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 IMPORTANCE OF BREAK EVEN ANALYSIS

• Break Even Analysis helps to address the following issues:

• What volume of sales will be necessary to cover a reasonable

return on capital Investment

• Computing costs and revenues for all possible volumes of output.

• To find the price of an article to give the desired profit.

• To determine the variable cost per unit.

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 ASSUMPTIONS OF BREAK EVEN AND COST-
VOLUME- PROFIT (CVP) ANALYSIS
1. Revenue: Revenue per unit is assumed to remain constant; fluctuations in
per-unit revenue for factors such as quantity discounts are ignored. Thus,
total revenue fluctuates in direct proportion to level of activity or volume

2. The total cost of production comprises of fixed cost and variable cost.

3. Fixed cost remains constant i.e. it is independent of the quantity produced .

As per unit fixed cost increases, volume decreases,. Fixed costs include both
manufacturing overheads and selling and administrative expenses.
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 ASSUMPTIONS OF BREAK EVEN AND COST-
VOLUME- PROFIT ANALYSIS
4. On the per unit basis variable costs are assumed to be remain
constant is directly proportional to the volume of production.

5. Selling price doesn’t change with the volume of change. Total

sales income is the product of P and Q, where, P is selling price
per unit and Q is the quantity produced.

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 BREAK-EVEN ANALYSIS: BASIC EQUATIONS
Break-even calculations can be demonstrated using the formula,

graph and income statement approaches.

Data needed to compute the break-even point and perform CVP

analysis are gotten from income statement.

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 BREAK-EVEN ANALYSIS: FORMULA APPROACH
Total Revenue = TR
TR = TC
Total Cost = TC
= F + Vx
Fixed Costs = F
Px =F + Vx
Variable Cost per unit = V
BEP (x) = F/(P-V)
Break-even point x = BEP(x)
BEP ($) =F/(1-(V/P)
Break-even point x = BEP ($)
Price per unit = P
Number of units = x
Contribution margin = CM

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 BREAK-EVEN ANALYSIS: FORMULA APPROACH
Another method of computing BEP in sales dollars requires the computation of a

Contribution Margin Ratio (CM%). CM% = CM/Revenue

This ratio indicates what proportion of revenue remains after variable cost has been

deducted from sales

BEP = Fixed Cost/CM%

The CM% allows the BEP to be determined even if unit selling price and unit variable

cost are not known

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 BREAK-EVEN ANALYSIS: GRAPHICAL APPROACH
Although solutions to BEP problems can be determined using equations, sometimes
the information is more effectively conveyed to managers in a visual format.

This is what is called the Break-Even Chart

The Break-even Chart was invented by Walter Rautenstrauch, an Industrial Engineer

and professor of Columbia University in 1930.
It is a graphical representation of relationship between various costs and sales
revenue at a given time.
It determines the Break Even Point.

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 FUNCTIONS OF A BREAK EVEN CHART
• It is an aid to management and it depicts a clearer view of the status of the
business.

• It is a graphical representation of the economic position of the business.

• It shows the profits and losses at various output level.

• It shows a relationship between marginal cost and fixed cost.

• It indicates No profit, No loss situation and margin of safety.

• It can help by making specific plans to affect profit through the control of
expenses.
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 BREAK-EVEN ANALYSIS: GRAPHICAL APPROACH
• Step 1: label each axis and graph the total cost and fixed cost lines. The
fixed cost line is drawn parallel to the x-axis (volume). The variable cost
line begins where the fixed cost line intersects the y-axis. The slope of
the variable cost line is the per-unit variable cost. The resulting line
represents total cost. The distance between the fixed cost and the total
cost lines represents total variable cost at each activity level.

• Step 2: : Chart the revenue line, beginning at $0. The BEP is located at
the intersection of the revenue line and the total cost line. The vertical
distance to the right of the BEP and between the revenue and total cost
lines represents profit; the distance between the revenue and total cost
lines to the left of the BEP represents loss. 22
 BREAK EVEN CHART

Cost and Sales Revenue

Variable Cost
θ

Fixed Cost
Margin of Safety

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 BREAK EVEN CHART
• The horizontal x-axis represents : Volume of production or number
of units produced.
• The fixed cost is represented by straight line parallel to the
horizontal axis.
• The vertical axis y-axis represents the cost and sales income
revenue)
• The sales income line passes through the origin.
• The point of intersection of sales income line and the total cost line
represent the break even point.
• Shaded area between the total cost line and sales income/ revenue
line on the left hand side of BEP indicates loss and the right hand
side of the BEP indicates profit.
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 BREAK EVEN CHART
• Margin of Safety: It is the distance between the BEP and the output being
produced at a particular variable cost line.

• If this distance is large, the profit will be large even there is a drop in
production and vice-versa.

• Angle of Incidence( θ): This is the angle at which sales revenue cuts the total
cost line.

• A larger θ indicates more profit at a higher rate. A larger angle of Incidence

at a high margin of safety marks the extremely favorable business position
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 BREAK EVEN ANALYSIS: INCOME STATMENT
APPROACH
• The income statement approach to finding BEP allows accountants to
prepare budgeted statements using available revenue and cost
information

• Because the formula, graphing, and income statement approaches are

based on the same relationships, each should align with the other.

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 A TYPICAL INCOME STATEMENT
• Lectern Retail Stores Co Ltd
• Income Statement
• For the year ended July, 31, 2021
Revenue • Net Sales
• 1200, 000
Variable Cost • Cost of goods sold
• 850, 000
Contribution Margin • Gross profit
• 350, 000
Fixed Cost • Selling, general, and administrative expenses
• 311, 000
Earning before Interest and Tax (EBIT) • Earnings from operations
• 39, 000
• Interest Expense
• 9000
• Earnings before tax
If earnings before tax(EBT) is 0 and the • 30000
• Income tax
business has broken even • 12000
• Net Income
• 18000

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 SIMPLE BREAK-EVEN POINT APPLICATION
(BEST LTD)
• The Best Company Ltd produces and sells quality pens. Its fixed
costs amount to €400,000 approximately, whereas each pen costs €12
to be produced. The company sells its products at the price of €20
each. The revenues, costs and profits are plotted under different
assumptions about sales in the break-even point graph presented
below.

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 SIMPLE BREAK-EVEN POINT APPLICATION
(BEST LTD)
• The following table shows the outcome for different quantities
of pens sold at Best LTD. Each pen cost $12 and is sold for $20,
hence contributing profit is $8 per pen

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 BREAK-EVEN POINT GRAPH

• Thus, 50,000 pens is the B.E.P. required for an accounting profit

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 SIMPLE BREAK-EVEN POINT APPLICATION
(BEST LTD)
The horizontal axis shows sales in terms of quantity (pens sold), whereas expenses and revenues
in euros are depicted in vertical axis. The horizontal line represents fixed costs (€400,000).
Regardless of the items sold, there is no change in this value. The diagonal line, the one that
begins from the zero point, expresses the company’s total revenue (pens sold at €20 each) which
increases according to the level of production. The other diagonal line that begins from
€400,000, depicts total costs and increases in proportion to the goods sold. This diagonal shows
the cost effect of variable expenses. Revenue and total cost curves cross at 50,000 pens. This is
the break even point, in other words the point where the firm experiences no profits or losses.
As long as sales are above 50,000 pens, the firm will make a profit. So, at 20,000 pens sold
company experiences a loss equal to €240,000, whereas if sales are increased to 80,000 pens,
the company will end up with a €240,000 profit.
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 BREAK EVEN ANALYSIS:RESTRICTIONS
• In every single estimation of the break-even level, we use a certain value
to the variable “selling price”. Therefore, if we want to find out the level
that produces profits under different selling prices, many calculations and
diagrams are required.
• A second drawback has to do with the variable “total costs”, since in
practice these costs are difficult to estimate due to the fact that there are
many things that can go wrong and mistakes that can occur in production.
• Another effect that is not algebraically measured is that changes in costs
may alter products’ quality.
• Also, the break-even point is not easily estimated in the “real world”,
because there is no mathematical calculation that allows for the
“competitive environment”. 32
 MULTIPRODUCT BREAK-EVEN POINT
• When B.E.P. of a single product is calculated, sales price
corresponds to the price of this product. However, in reality
firms sell many products.
• An important assumption in a multiproduct setting is that the
sales mix of different products is known and remains constant
during the planning period.
• The sales mix is the ratio of the sales volume for the various
products.

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 MULTIPRODUCT BREAK-EVEN POINT
• Quick Coffee, is a cafeteria that sells three types of hot drinks: white/black
coffee, espresso and hot chocolate.
• The unit selling price for these three hot drinks are €3, €3.5 and €4
respectively.
• In particular, 50% of total revenue is generated by selling classic coffee,
while espresso and hot chocolate corresponds to 30% and 20% of total
revenues respectively.
• At the same time, variable costs amount to €0.5 (white/black coffee), €0.6
(espresso) and €0.7 (hot chocolate).
• Company’s fixed costs are €55,000
• The owner of this café wants to estimate its break-even point for next year.
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 MULTIPRODUCT BREAK-EVEN POINT
• An important assumption is
that current sales mix will not
change next year.
• Compute the weighted
average for these two
variables, selling price and
variable costs
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 MULTIPRODUCT BREAK-EVEN POINT
• Applying the B.E.P. formula;
• B.E.P. = €55,000 / (€3.35 – €0.57) = 19,784 units (of all 3 products)
• This computation implies that Quick Coffee breaks even when it sells 19,784
hot drinks in total.
• To determine how many units of each product it must sell to break even we
multiply the break-even value with the ratio of each product’s revenue to
total revenues:
Classic Coffee: 19,784 × 50% = 9,892 units,
Espresso: 19,784 × 30% = 5,935 units
Hot Chocolate: 19,784 × 20% = 3,957 units
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 APPLYING BREAK-EVEN ANALYSIS IN SERVICES
INDUSTRY
Break-even analysis can be applied to services as well
• The marketing department of a company called Advertising Ltd came up with
the idea of “buying” advertising space of urban buses in Town Ville. They
believe that many local companies will be willing to be advertised in urban
buses by having their logos and various advertisements placed along the
buses’ sides. Also, they believe that annual “bus rental” (advertising in every
dimension of a bus) can be “sold” for €1,500.
• Municipal Bus Line, during negotiations with Advertising Ltd, made the
following proposal: “Fixed payment of €500 for each bus of its fleet and extra
payment (variable rental cost) €200 for each bus that will be used as for
advertisement by Advertising’s clients“. Given that the agreement will be valid
for every single local bus of municipal lines (40 buses in total).

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APPLYING BREAK-EVEN ANALYSIS IN SERVICES
INDUSTRY

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 APPLYING BREAK-EVEN ANALYSIS IN SERVICES
INDUSTRY
Generally, there are three ways for a company to lower its break-even
volume, two of them involve cost controls:
• Lower direct costs (i.e. controlling inventory), which will raise the gross
margin,
• exercise cost controls on fixed expense (i.e. use of capital budgeting) and
• raise prices (not easy in a price-sensitive market).
After several meetings, the Finance and Marketing Department ended up with
the following scenario to be proposed to Municipal Bus Lines:
“Fixed payment of €250 for each bus of its fleet and extra payment (variable
rental cost) €600 for each bus that will be used in campaign”.
In this case, the total cost for each bus is €850, that is €150 more than the
previous scenario.

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APPLYING BREAK-EVEN ANALYSIS IN SERVICES
INDUSTRY

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APPLYING BREAK-EVEN ANALYSIS IN SERVICES
INDUSTRY

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Assignment One
• With the aid of Break Even Charts, examine the effect of changes in
fixed cost on the BEP
• Submission Deadline -8th April, 2022 by 3 PM

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 APPLYING BREAK-EVEN ANALYSIS IN SERVICES
INDUSTRY
• Total costs under the first scenario begin from €20,000 and rise with a low rate, while total costs under
the second scenario begin from a significantly lower point (€10,000) but increase rapidly as sales rise.

• The intersection of the two lines (point A) gives us the point at which total costs under two scenarios are
equal, which is over 25 buses.

• Total costs – under scenario 1 – increase with a lower rate

• However, total costs in scenario 2 increase with a higher rate.

• Inference is obvious. If the Marketing department of Advertising Ltd. believes that more than 25 buses will
be “rented” (63% of total fleet of buses), then there is no need to make a different proposal and should
agree with Municipal Bus Lines’ offer.

• On the other hand, the second scenario could be proposed because this project is a new venture and the
most important thing during the first year is to lower the break-even point rather than to maximize profits.43
 OPERATING LEVERAGE

• Leverage is used to describe the ability of a firm to use fixed cost assets or funds to increase
the return to its shareholders equity.

• Operating leverage relates sales (in volume) with operational earnings(EBIT).

• Lets consider the operating leverage in three different companies that sell the same product.

• Company “A” maintains a low level of fixed assets therefore its fixed costs (€30,000). But, in
order to offset this weakness it “suffers” from high variable expenses (€2).

• Company “B” experiences lower variable costs (€1.5), as a consequence of having invested in
new, more productive machinery (fixed costs €50,000). This company ends up with a greater
break-even value, due to the higher fixed expenses.
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 OPERATING LEVERAGE
• Finally, company “C” has spent large amount in buying latest machinery and building
plants (resulting to a fixed costs of €60,000). Its production is fully automated and fewer
workers are needed. It has a variable cost per unit of € 1.

• All the companies have a selling price of €4.

• So, at €15,000 units company “A” breaks-even, but “B” is making loss. Break-even value
for company “C” is higher than the one that “B” experiences. But, beyond this point its
profits highly increase at each level of rising sales

• This is a useful information for its Marketing Department and generally for its management
when it prepares company’s pricelist.

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 OPERATING LEVERAGE

COMPANY “A” COMPANY “B”

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OPERATING LEVERAGE

Company “C”
Selling Price: €4
Fixed Expense: €60,000
Variable Cost (per unit): €1

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 OPERATING LEVERAGE
• We are take the selling price of (€4) for granted, but what if the company
C, wants to increase its market share by reducing its price. The following
table gives us the answer:
A B C
Total Cost (€) 430,000 350,000 260,000
Units sold 200,000 200,000 200,000
Cost per unit (€) 2.15 1.75 1.30

Company “A” Company “B”

Selling Price: €4 Selling Price: €4
Fixed Expense: €30,000 Fixed Expense: €50,000
Variable Cost (per unit): €2 Variable Cost (per unit): €1.5

So company C wants to increase its market share by dropping prices 48

 OPERATING LEVERAGE
• When there is mass production (200,000 units) total cost per unit
for company “C” is €1.30, which gives a significant cost advantage
against competitors “A” and “B”.
• In this case, company “C” can lower the selling price and offer its
products at the price of €2. This price knocks out of competition
company “A”, while company “B” makes marginal profits. It is,
therefore, obvious that there is an interaction between investment
in fixed assets, variable costs and invoicing.

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 OPERATING LEVERAGE
• By applying this equation to companies “A” and “B” and for sales
volume 60,000 units (from 50,000 units) we find out that operating
level is 1.43 and 1.65 respectively. The meaning is that if company “B”
sells 10% more products, its profits will increase by 16.5%, while if
company “A” experiences same rise in sales, it will end up with a
14.3% growth in its profits.

• So, earnings of company “B” are more sensitive to changes in the

volume of items’ sold than earnings of company “A”.
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 OPERATING LEVERAGE
• In other words, the larger the degree of operating leverage, the greater
the profits’ volatility.

• Consequently, a high degree of operating leverage implies that an

aggressive price policy (a situation where products’ prices decrease in the
expectation of relatively higher increase in units sold) may lead to an
important rise of profits, especially if the subject market is sensitive to
products prices (e.g. pharmaceuticals).

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 EFFECT OF INCREASES IN FIXED COST,
VARIABLE COST AND SALES REVENUE ON BEP

• Increasing fixed cost, variable cost and sale revenue can have

an effect on the Break-even Point

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 EFFECT OF INCREASING FIXED COST ON BREAK-
EVEN POINT
• An increase in fixed cost could possibly be due to the purchase of new
machines or investments in expanding a production facility.

• This would increase the total costs and thus shifts BEP towards Right
Hand Side(RHS).

• This causes the decrease in profit for the same output and vice-
versa.

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 EFFECT OF INCREASING FIXED COST ON
BEP
TR
Where: FC is fixed cost
TC 2 TC is total cost
TR is total revenue
TC 1
Revenue/Cost

FC 2

FC 1
Volume of Output
BEP 1 BEP 2 54
 EFFECT OF INCREASING VARIABLE COST

• An increase in variable cost and, therefore, in the total cost possibly due
to increase in labour cost would shift the BEP towards Right Hand
Side(RHS).

• This causes a decrease in profit for the same output and vice-versa.

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 EFFECT OF INCREASING VARIABLE COST ON
BEP
TR
Where: FC is fixed cost
TC is total cost
TC 2 TR is total revenue

TC 1
Revenue/Cost

FC 1
Volume of Output
BEP 1 BEP 2 56
 EFFECTS OF INCREASING SALES
VOLUME ON BP

• If the price of an item (goods) increase a new sales revenue will

be drawn with a greater slopes .

• This will shift the BEP towards Left Hand Side(LHS). This causes
an increase in profit for the same output and vice-versa.

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 EFFECT OF INCREASING SALES REVENUE
ON BEP
TR 2 TR 1
Where: FC is fixed cost
TC is total cost
TC 2 TR is total revenue

TC 1
Revenue/Cost

FC 1
BEP 1 BEP 2 Volume of Output

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 DISCOUNT AND PROMOTION

• A common question when deciding marketing strategies is “Should we

offer a discount?”.

• The answer to this question involves the examination of many factors

such as the competition, the elasticity of demand etc.

• Break-even analysis can be use to answer the above question from a

pure cost and profit perspective.

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 DISCOUNT AND PROMOTION-EXAMPLE
• Let us assume that the owner of a cinema in Alicante, Spain wants to increase the number
of customers in August. His records indicate that his 500-seat hall, is typically less than 30
percent full during August (the lowest tickets sales among the twelve months of the year).
He wants to increase the number of ticket sold beyond the average of 150 per day for that
month (500 seats × 30%). In order to achieve that, he decides to offer a 20 percent
discount to everyone who buys tickets during that month. To promote his offer he will run
advertisements in a newspaper at a cost of €1000. If the selling price, without the discount
offer, is €10 and the variable cost per person is €2, how many additional customers must
he generate in August through this promotion in order to break-even on the total expenses
related to the promotion and the discount offer?

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 DISCOUNT AND PROMOTION-SOLUTION
• First estimate the total expenses related to the promotion and the discount offer
(fixed costs).

• In this case, we have obvious costs of €1000 (advertisement) and a “hidden” cost.
This “hidden” cost reflects the lost profit from the discount offer.

• This is calculated as follows:

- 500 seats × 30% average ticket sales for August = 150 tickets per day

- Lost profit per customer €10 × 20% discount = €2 per customer

- Total Lost profit for August: 150 tickets × €2 × 31days = €9,300

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 DISCOUNT AND PROMOTION

• Approximately 56 more tickets must be sold per day in August to cover the
total cost of the promotion (advertisement and discount).
• In other words, 206 tickets must be sold on average per day to have the
same profit as at the level of 150 tickets before the promotion.
• The owner of the cinema can use this figure as an additional tool to decide
whether this is a good idea or not.

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 CONCLUSION
• Break-even analysis is useful as a first step in developing financial
applications, which can be used in invoicing and budgeting.
• The main purpose of this analysis is to have some idea of how much to
sell, before a profit will be made.
• Break-even analysis is extremely important before starting a new business
(or launching a new product) because it gives answers to crucial questions
such as “how sensitive is the profit of the business to decreases in sales or
increases in costs”.
• This analysis can be also extended to early stage business in order to
determine how accurate the first predictions were and monitor whether the
firm is on the right path (the one that leads to profits) or not.
• Even, mature business must take into consideration their current B.E.P. and
find ways to lower that benchmark in order to increase profits.
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