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Essay: Break Even Analysis – Profit, Revenue and Costs

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Break Even Analysis – Profit, Revenue and Costs

Break Even Analysis

The break-even point (BEP) is the point at which the cost of producing a product or providing a service exactly matches the revenue gained from selling that product or service. For example, if a firm’s total annual costs are £1m and in the same year it generates £1m of revenue, then the firm is said to have broken-even, as it hasn’t made any more or less than it has invested:

Image source: http://www.chegg.com/homework-help/definitions/break-even-point-37

Figure 1. Break Even Point

The fixed costs (horizontal line) do not vary with output – they are the costs of running the business. The variable costs (line starting on top of fixed costs) are directly related to volume and increase or decrease as production and sales increase or decrease. Together they add up to give total costs. The revenue line (starting from zero) shows the total sales at a given price and volume. The BEP is the point at which the revenue and total cost lines cross.

A working example:

A designer mug costs £10 to buy. The variable costs are £6 per mug which makes the contribution to fixed costs £4 per unit. The total fixed costs are £12,000. The BEP point is calculated as follows:

Fixed costs / contribution per unit 12,000 / 4

Fixed costs / price – variable costs = BEP = 300 units

Or in terms of value

BEP in units x price per unit 300 x £10 = £30,000

This is a simple and straight-forward technique that is widely used. It will show the profit or loss made at different levels of output, the BEP at different prices and the effect on the BEP and profit if costs change.

The BEP analysis is often used as a tool in price setting. A company can produce several variations of this chart to compare the revenue, total cost and BEP for different price scenarios. Whilst it won’t give an absolute answer it will highlight the options that should be avoided.

The major disadvantage with break-even analysis is that demand is assumed to be inelastic. It suggests that a higher price will make the revenue curve steeper and therefore lower the BEP. However in reality there will often be a maximum price that customers will pay. This will vary by customer and be dependent on many factors including the cost of switching and the availability of alternatives. The BEP is therefore more about whether a company can sell enough to break-even rather than about what volume they can expect to sell. It must be remembered that this is a revenue curve, not a demand curve.

Another downside of break-even analysis is that it focuses on how to break-even rather than achieve a specific objective, such as percentage market share or a specific return on investment (ROI).

That said, analysing the BEP can help to determine whether a new product has enough critical mass to make a profit and is feasible to be launched. It can also be used to support business cases where funding is needed by demonstrating that a product can be made and sold profitably.

As a result, we can see that BEP analysis should be used for evaluation purposes rather than to base decisions on.

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What Is Break-Even Analysis?

Break-even point formula.

Calculating BEP and Contribution Margin

Who Calculates the BEP?

Why break-even analysis matters, the bottom line.

Investing Basics

Break-Even Analysis: Formula and Calculation

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Gordon Scott has been an active investor and technical analyst or 20+ years. He is a Chartered Market Technician (CMT).

Break-even analysis compares income from sales to the fixed costs of doing business. Five components of break-even analysis include fixed costs, variable costs, revenue, contribution margin, and break-even point (BEP). When companies calculate the BEP, they identify the amount of sales required to cover all fixed costs to begin generating a profit. The break-even point formula can help find the BEP in units or sales dollars.

Key Takeaways:

Using the break-even point formula, businesses can determine how many units or dollars of sales cover the fixed and variable production costs.
The break-even point (BEP) is considered a measure of the margin of safety.
Break-even analysis is used broadly, from stock and options trading to corporate budgeting for various projects.

Investopedia / Paige McLaughlin

Break-even analysis involves a calculation of the break-even point (BEP) . The break-even point formula divides the total fixed production costs by the price per individual unit, less the variable cost per unit.

BEP = Fixed Costs / (Price Per Unit - Variable Cost Per Unit)

Break-even analysis looks at the fixed costs relative to the profit earned by each additional unit produced and sold. A firm with lower fixed costs will have a lower break-even point of sale and $0 of fixed costs will automatically have broken even with the sale of the first product, assuming variable costs do not exceed sales revenue. Fixed costs remain the same regardless of how many units are sold. Examples of fixed and variable costs include:

Calculating the Break-Even Point and Contribution Margin

Break-even analysis and the BEP formula can provide firms with a product's contribution margin. The contribution margin is the difference between the selling price of the product and its variable costs. For example, if an item sells for $100, with fixed costs of $25 per unit, and variable costs of $60 per unit, the contribution margin is $40 ($100 - $60). This $40 reflects the revenue collected to cover the remaining fixed costs, which are excluded when figuring the contribution margin.

Contribution Margin = Item Price - Variable Cost Per Unit

To find the total units required to break even, divide the total fixed costs by the unit contribution margin. Assume total fixed costs are $20,000. With a contribution margin of $40 above, the break-even point is 500 units ($20,000 divided by $40). Upon selling 500 units, the payment of all fixed costs is complete, and the company will report a net profit or loss of $0.

BEP (Units) = Total Fixed Costs / Contribution Margin

To calculate the break-even point in sales dollars, divide the total fixed costs by the contribution margin ratio. The contribution margin ratio is the contribution margin per unit divided by the sale price.

Contribution Margin Ratio = Contribution Margin Per Unit / Item Price

BEP (Sales Dollars) = Total Fixed Costs / Contribution Margin Ratio

The contribution margin ratio is 40% ($40 contribution margin per item divided by $100 sale price per item). The break-even point in sales dollars is $50,000 ($20,000 total fixed costs divided by 40%).

In accounting, the margin of safety is the difference between actual sales and break-even sales. Managers utilize the margin of safety to know how much sales can decrease before the company or project becomes unprofitable.

Entrepreneurs
Financial Analysts
Stock and Option Traders
Government Agencies

Although investors are not interested in an individual company's break-even analysis on their production, they may use the calculation to determine at what price they will break even on a trade or investment. The calculation is useful when trading in or creating a strategy to buy options or a fixed-income security product.

Pricing : Businesses get a comprehensible perspective on their cost structure with a break-even analysis, setting prices for their products that cover their fixed and variable costs and provide a reasonable profit margin.
Decision-Making : When it comes to new products and services, operational expansion, or increased production, businesses can chart their profit to sales volume and use break-even analysis to help them make informed decisions surrounding those activities.
Cost Reduction : Break-even analysis helps businesses find areas to reduce costs to increase profitability.
Performance Metric: Break-even analysis is a financial performance tool that helps businesses ascertain where they are in achieving their goals.

What Are Some Limitations of Break-Even Analysis?

Break-even analysis assumes that the fixed and variable costs remain constant over time. Costs may change due to factors such as inflation, changes in technology, or changes in market conditions. It also assumes that there is a linear relationship between costs and production. Break-even analysis ignores external factors such as competition, market demand, and changes in consumer preferences.

What Are the Components of Break-Even Analysis?

There are five components of break-even analysis including fixed costs, variable costs, revenue, contribution margin, and the break-even point (BEP).

Why Is the Contribution Margin Important in Break-Even Analysis?

The contribution margin represents the revenue required to cover a business' fixed costs and contribute to its profit. Through the contribution margin calculation, a business can determine the break-even point and where it can begin earning a profit.

How Do Businesses Use the Break-Even Point in Break-Even Analysis?

The break-even point (BEP) helps businesses with pricing decisions, sales forecasting, cost management, and growth strategies. A business would not use break-even to measure its repayment of debt or how long that repayment will take to complete.

Break-even analysis is a tool used by businesses and stock and option traders. Break-even analysis is essential in determining the minimum sales volume required to cover total costs and break even. It helps businesses choose pricing strategies, and manage costs and operations. In stock and options trading, break-even analysis helps find the minimum price movements required to cover trading costs and make a profit. Traders can use break-even analysis to set realistic profit targets, manage risk, and make informed trading decisions.

U.S. Small Business Administration. " Break-Even Point ."

Professor Rosemary Nurre, College of San Mateo. " Accounting 131: Chapter 6, Cost-Volume-Profit Relationships ."

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Break-Even Analysis Explained - Full Guide With Examples

Did you know that 30% of operating small businesses are losing money? Running your own business is trickier than it sounds. You have to plan ahead carefully to break-even or be profitable in the long run.

Building your own small business is one of the most exciting, challenging, and fun things you can do in this generation.

To start and sustain a small business it is important to know financial terms and metrics like net sales, income statement and most importantly break-even point .

Performing break-even analysis is a crucial activity for making important business decisions and to be profitable in business.

So how do you do it? That is what we will go through in this article. Some of the key takeaways for you when you finish this guide would be:

Understand what break-even point is
Know why it is important
Learn how to calculate break-even point
Know how to do break-even analysis
Understand the limitations of break-even analysis

So, if you are tired of your nine-to-five and want to start your own business, or are already living your dream, read on.

What is Break-Even Point?

Small businesses that succeeds are the ones that focus on business planning to cross the break-even point, and turn profitable .

In a small business, a break-even point is a point at which total revenue equals total costs or expenses. At this point, there is no profit or loss — in other words, you 'break-even'.

Break-even as a term is used widely, from stock and options trading to corporate budgeting as a margin of safety measure.

On the other hand, break-even analysis lets you predict, or forecast your break-even point. This allows you to course your chart towards profitability.

Managers typically use break-even analysis to set a price to understand the economic impact of various price and sales volume calculations.

The total profit at the break-even point is zero. It is only possible for a small business to pass the break-even point when the dollar value of sales is greater than the fixed + variable cost per unit.

Every business must develop a break-even point calculation for their company. This will give visibility into the number of units to sell, or the sales revenue they need, to cover their variable and fixed costs.

Importance of Break-Even Analysis for Your Small Business

A business could be bringing in a lot of money; however, it could still be making a loss. Knowing the break-even point helps decide prices, set sales targets, and prepare a business plan.

The break-even point calculation is an essential tool to analyze critical profit drivers of your business, including sales volume, average production costs, and, as mentioned earlier, the average sales price. Using and understanding the break-even point, you can measure

how profitable is your present product line
how far sales drop before you start to make a loss
how many units you need to sell before you make a profit
how decreasing or increasing price and volume of product will affect profits
how much of an increase in price or volume of sales you will need to meet the rise in fixed cost

How to Calculate Break-Even Point

There are multiple ways to calculate your break-even point.

Calculate Break-even Point based on Units

One way to calculate the break-even point is to determine the number of units to be produced for transitioning from loss to profit.

For this method, simply use the formula below:

Break-Even Point (Units) = Fixed Costs ÷ (Revenue per Unit – Variable Cost per Unit)

Fixed costs are those that do not change no matter how many units are sold. Don't worry, we will explain with examples below. Revenue is the income, or dollars made by selling one unit.

Variable costs include cost of goods sold, or the acquisition cost. This may include the purchase cost and other additional costs like labor and freight costs.

Calculate Break-Even Point by Sales Dollar - Contribution Margin Method

Divide the fixed costs by the contribution margin. The contribution margin is determined by subtracting the variable costs from the price of a product. This amount is then used to cover the fixed costs.

Break-Even Point (sales dollars) = Fixed Costs ÷ Contribution Margin

Contribution Margin = Price of Product – Variable Costs

Let’s take a deeper look at the some common terms we have encountered so far:

Fixed costs: Fixed costs are not affected by the number of items sold, such as rent paid for storefronts or production facilities, office furniture, computer units, and software. Fixed costs also include payment for services like design, marketing, public relations, and advertising.
Contribution margin: Is calculated by subtracting the unit variable costs from its selling price. So if you’re selling a unit for $100 and the cost of materials is $30, then the contribution margin is $70. This $70 is then used to cover the fixed costs, and if there is any money left after that, it’s your net profit.
Contribution margin ratio: is calculated by dividing your fixed costs from your contribution margin. It is expressed as a percentage. Using the contribution margin, you can determine what you need to do to break-even, like cutting fixed costs or raising your prices.
Profit earned following your break-even: When your sales equal your fixed and variable costs, you have reached the break-even point. At this point, the company will report a net profit or loss of $0. The sales beyond this point contribute to your net profit.

Small Business Example for Calculating Break-even Point

To show how break-even works, let’s take the hypothetical example of a high-end dressmaker. Let's assume she must incur a fixed cost of $45,000 to produce and sell a dress.

These costs might cover the software and materials needed to design the dress and be sure it meets the requirement of the brand, the fee paid to a designer to design the look and feel of the dress, and the development of promotional materials used to advertise the dress.

These costs are fixed as they do not change per the number of dresses sold.

The variable costs would include the materials used to make each dress — embellishment’s for $30, the fabric for the body for $20, inner lining for $10 — and the labor required to assemble the dress, which amounted to one and a half hours for a worker earning $50 per hour.

Thus, the unit variable costs to make a single dress is $110 ($60 in materials and $50 in labor). If she sells the dress for $150, she’ll make a unit margin of $40.

Given the $40 unit margin she’ll receive for each dress sold, she will cover her $45,500 total fixed cost will be covered if she sells:

Break-Even Point (Units) = $45,000 ÷ $40 = 1,125 Units

You can see per the formula , on the right-hand side, that the Break-even is 1,125 dresses or units

In other words, if this dressmaker sells 1,125 units of this particular dress, then she will fully recover the $45,000 in fixed costs she invested in production and selling. If she sells fewer than 1,125 units, she will lose money. And if she sells more than 1,125 units, she will turn a profit. That’s the break-even point.

What if we change the price?

Suppose our dressmaker is worried about the current demand for dresses and has concerns about her firm’s sales and marketing capabilities, calling into question her ability to sell 1,125 units at a price of $150. What would be the effect of increasing the price to $200?

This would increase the unit margin to $90.Then the number of units to be sold would decline to 500 units. With this information, the dressmaker could assess whether she was better off trying to sell 1,125 dresses at $150 or 500 dresses at $200, and priced accordingly.

What if we want to make an investment and increase the fixed costs?

Break-even analysis also can be used to assess how sales volume would need to change to justify other potential investments. For instance, consider the possibility of keeping the price at $150, but having a celebrity endorse the dress (think Madonna!) for a fee of $20,000.

This would be worthwhile if the dressmaker believed that the endorsement would result in total sales of $66,000 (the original fixed cost plus the $20,000 for Ms. Madonna).

With the Fixed Costs at $66,000 we see, it would only be worthwhile if the dressmaker believed that the endorsement would result in total sales of 1,650 units.

In other words, if the endorsement led to incremental sales of 525 dress units, the endorsement would break-even. If it led to incremental sales of greater than 525 dresses, it would increase profits.

What if we change the variable cost of producing a good?

Break-even also can be used to examine the impact of a potential change to the variable cost of producing a good.

Imagine that our dressmaker could switch from using a rather plain $20 fabric for the dress to a higher-end $40 fabric, thereby increasing the variable cost of the dress from $110 to $130 and decreasing the unit margin from $40 to $20. How much would your sales need to increase to compensate for the extra cost?

Suppose the Variable Cost is $130 (and the Fixed Cost is $45,000 – our dressmaker can’t afford to have nice fabric plus get Ms. Madonna). It would make better sense to switch to the nicer fabric if the dressmaker thought it would result in sales of 2,250 units, an additional 1125 dresses, which is double the number of initial sale numbers.

You likely aren’t a dressmaker or able to get a celebrity endorsement from Ms. Madonna, but you can use break-even analysis to understand how the various changes of your product, from revenue, costs, sales, impact your small business’s profitability .

What Are the Benefits of Doing a Break-even Analysis?

Smart Pricing : Finding your break-even point will help you price your products better. A lot of effort and understanding goes into effective pricing, but knowing how it will affect your profitability is just as important. You need to make sure you can pay all your bills.

Cover Fixed Costs : When most people think about pricing, they think about how much their product costs to create. Those are considered variable costs. You will still need to cover your fixed costs like insurance or web development fees. Doing a break-even analysis helps you do that.

Avoid Missing Expenses : When you do a break-even analysis, you have to lay out all your financial commitments to figure out your break-even point. It’s easy to forget about expenses when you’re thinking through a business idea. This will limit the number of surprises down the road.

Setting Revenue Targets : After completing a break-even analysis, you know exactly how much you need to sell to be profitable. This will help you set better sales goals for you and your team.

Decision Making : Usually, business decisions are based on emotion. How you feel is important, but it’s not enough. Successful entrepreneurs make their decisions based on facts. It will be a lot easier to decide when you’ve put in the work and have useful data in front of you.

Manage Financial Strain : Doing a break-even analysis will help you avoid failures and limit the financial toll that bad decisions can have on your business. Instead, you can be realistic about the potential outcomes by being aware of the risks and knowing when to avoid a business idea.

Business Funding : For any funding or investment, a break-even analysis is a key component of any business plan. You have to prove your plan is viable. It’s usually a requirement if you want to take on investors or other debt to fund your business.

When to Use Break-even Analysis

Starting a new business.

If you’re thinking about a small online business or e-commerce, a break-even analysis is a must. Not only does it help you decide if your business idea is viable, but it makes you research and be realistic about costs, as well as think through your pricing strategy.

Creating a new product

Especially for a small business, you should still do a break-even analysis before starting or adding on a new product in case that product is going to add to your expenses. There will be a need to work out the variable costs related to your new product and set prices before you start selling.

Adding a new sales channel

If you add a new sales channel, your costs will change. Let's say you have been selling online, and you’re thinking about opening an offline store; you’ll want to make sure you at least break-even with the brick and mortar costs added in. Adding additional marketing channels or expanding social media spends usually increases daily expenses. These costs need to be part of your break-even analysis.

Changing the business model

Let's say you are thinking about changing your business model; for example, switching from buying inventory to doing drop shipping or vice-versa, you should do a break-even analysis. Your costs might vary significantly, and this will help you figure out if your prices need to change too.

Limitations of Break-even Analysis

The Break-even analysis focuses mostly on the supply-side (i.e., costs only) analysis. It doesn't tell us what sales are actually likely to be for the product at various prices.
It assumes that fixed costs are constant. However, an increase in the scale of production is likely to lead to an increase in fixed costs.
It assumes average variable costs are constant per unit of output, per the range of the number of sales
It assumes that the number of goods produced is equal to the number of goods sold. It believes that there is no change in the number of goods held in inventory at the beginning of the period and the number of goods held in inventory at the end of the period
In multi-product companies, the relative proportions of each product sold and produced are fixed or constant.

So that's a wrap. Hope you found this article interesting and informative. Feel free to subscribe to our blog to get updates on awesome new content we publish for small business owners.

Key Takeaways

Break-even analysis is infinitely valuable as it sets the framework for pricing structures, operations, hiring employees, and obtaining future financial support.

You can identify how much, or how many, you have to sell to be profitable.
Identify costs inside your business that should be alleviated or eliminated.

Remember, any break-even analysis is only as strong as its underlying assumptions.

Like many forecasting metrics, break-even point is subject to it's limitations; however it can be a powerful and simple tool to provide a small business owner with an idea of what their sales need to be in order to start being profitable as quickly as possible.

Lastly, please understand that break-even analysis is not a predictor of demand .

If you go to market with the wrong product or the wrong price, it may be tough to ever hit the break-even point. To avoid this, make sure you have done the groundwork before setting up your business.

Head over to our small business guide on setting up a new business if you want to know more.

Want to calculate break even point quickly? Use our handy break-even point calculator.

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A Quick Guide to Breakeven Analysis

It’s a simple calculation, but do you know how to use it?

In a world of Excel spreadsheets and online tools, we take a lot of calculations for granted. Take breakeven analysis. You’ve probably heard of it. Maybe even used the term before, or said: “At what point do we break even?” But because you may not entirely understand the math — and because understanding the formula can only deepen your understanding of the concept — here’s a closer look at how the concept works in reality.

Amy Gallo is a contributing editor at Harvard Business Review, cohost of the Women at Work podcast , and the author of two books: Getting Along: How to Work with Anyone (Even Difficult People) and the HBR Guide to Dealing with Conflict . She writes and speaks about workplace dynamics. Watch her TEDx talk on conflict and follow her on LinkedIn . amyegallo

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Building Your Business
Operations & Success

Breakeven Analysis—Fixed Cost, Variable Cost, & Profit

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Fixed Costs

Variable costs, sample computation, using breakeven calculations.

A breakeven analysis determines the sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price. It often is used in conjunction with a sales forecast when developing a pricing strategy, either as part of a marketing plan or a business plan .

The formula for a breakeven analysis is:

Fixed costs/(Revenue per unit-Variable costs per unit)

Fixed costs are expenses that must be paid whether or not any units are produced. They are fixed over a specified period of time or range of production, and examples include:

Business premises lease (or mortgage) costs over the contract period
Startup loan payments (if you financed the business startup costs )
Property taxes
Vehicle leases (or loan payments if the vehicle is purchased)
Equipment (machinery, tools, computers, etc.)
Payroll (if employees are on salary)
Accounting fees

Fixed costs are easy to calculate for existing businesses, but new businesses must do research to get the most accurate figures available.

Unit costs vary depending on the number of products produced and other factors. For instance, the cost of the materials needed and the labor used to produce units isn't always the same. Examples of variable costs include:

Wages for commission-based employees (such as salespeople) or contractors
Utility usage—electricity, gas, or water—that increases with activity
Raw materials
Advertising (can be fixed or variable)
Equipment repair
Sales tools such as credit card processing fees

Suppose that your fixed costs for producing 30,000 widgets are $30,000 a year.

Your variable costs are $2.20 for materials, $4 for labor, and $0.80 for overhead for a total of $7.

If you choose a selling price of $12.00 for each widget, then:

$30,000/($12-$7)=6,000 units .

This means that selling 6,000 widgets at $12 apiece covers your costs of $30,000. Each unit sold beyond 6,000 generates $5 worth of profit. A sample breakdown leading to this calculation might look soething like this:

A breakeven analysis allows you to apply various scenarios to your breakeven point and possibly increase profits. Some reasons to calculate the analysis include:

Increasing the selling price : Staying with the example of $12 widgets, increasing the selling price by $1 reduces the number of units you need to sell by 1,000 based on a new calculation: $30,000/($13-$7)=5,000. However, increasing the selling price often is not an option in a highly competitive environment.
Reducing your fixed costs : If you were able to reduce your fixed costs by $5,000, you also would reduce the breakeven point to 5,000 units sold. Reducing rent and payroll are common ways for businesses to reduce fixed costs, as is relocating to other jurisdictions that have lower business taxes or utility costs.
Reducing variable costs : Reducing variable costs by $1 also would lower the breakeven point by 5,000 units. Variable costs typically are lowered by reducing material or labor costs. For example, a builder could source lumber from a lower-cost supplieror take advantage of equipment and/or technology to automate production.
Increasing sales: Assuming breakeven unit sales of 6,000, increasing the number of units sold to 10,000 would boost profits by $20,000 (4,000 units at $5 per unit). This calculation can be used when considering the benefits of advertising. Raising your advertising budget by $5,000 per year would raise your fixed costs to $35,000 and your breakeven point to 7,000. If such an ad campaign raised your unit sales from 6,000 to more than 7,000, it would be considered successful.

What Is Break-Even Analysis and How to Calculate It for Your Business?

You may have an idea that spurs you to open a business or launch a new product on little more than a hope and a dream. Or, you might just be thinking about expanding a product offering or hiring additional personnel. It’s wise, however, to limit your risk before jumping in. A break-even analysis will reveal the point at which your endeavor will become profitable—so you can know where you’re headed before you invest your money and time.

A break-even analysis will provide fodder for considerations such as price and cost adjustments. It can tell you whether you may need to borrow money to keep your business afloat until you’re pocketing profits, or whether the endeavor is worth pursuing at all.

What Is Break-Even Analysis?

A break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs. At that point, you will have neither lost money nor made a profit.

Key Takeaways

A break-even analysis reveals when your investment is returned dollar for dollar, no more and no less, so that you have neither gained nor lost money on the venture.
A break-even analysis is a financial calculation used to determine a company’s break-even point (BEP). In general, lower fixed costs lead to a lower break-even point.
A business will want to use a break-even analysis anytime it considers adding costs—remember that a break-even analysis does not consider market demand.
There are two basic ways to lower your break-even point: lower costs and raise prices.

How Break-Even Analysis Works

A break-even analysis is a financial calculation used to determine a company’s break-even point (BEP). It is an internal management tool, not a computation, that is normally shared with outsiders such as investors or regulators. However, financial institutions may ask for it as part of your financial projections on a bank loan application.

The formula takes into account both fixed and variable costs relative to unit price and profit. Fixed costs are those that remain the same no matter how much product or service is sold. Examples of fixed costs include facility rent or mortgage, equipment costs, salaries, interest paid on capital, property taxes and insurance premiums.

Variable costs rise and fall according to changes in sales. Examples of variable costs include direct hourly labor payroll costs, sales commissions and costs for raw material, utilities and shipping. Variable costs are the sum of the labor and material costs it takes to produce one unit of your product.

Total variable cost is calculated by multiplying the cost to produce one unit by the number of units you produced. For example, if it costs $10 to produce one unit and you made 30 of them, then the total variable cost would be 10 x 30 = $300.

What is Contribution Margin?

The contribution margin is the difference (more than zero) between the product’s selling price and its total variable cost. For example, if a suitcase sells at $125 and its variable cost is $15, then the contribution margin is $110. This margin contributes to offsetting fixed costs.

Unit Contribution Margin = Sales Price – Variable Costs

The average variable cost is calculated as your total variable cost divided by the number of units produced.

In general, lower fixed costs lead to a lower break-even point—but only if variable costs are not higher than sales revenue.

Why Does Your Business Need to Perform Break-Even Analysis?

A break-even analysis has broad uses on its own merit. But it’s also a critical element of financial projections for startups and new or expanded product lines. Use it to determine how much seed money or startup capital you’ll need, and whether you’ll need a bank loan.

More mature businesses use break-even analyses to evaluate their risks in a variety of activities such as moving innovative ideas to production, adding or deleting products from the product mix and other scenarios. One example is in budgeting the addition of a new employee. A break-even analysis will reveal how many additional sales it will take to break even on expenses associated with the new hire.

What Is a Standard Break-Even Time Period?

An acceptable break-even window is six to 18 months. If your calculation determines a break-even point will take longer to reach, you likely need to change your plan to reduce costs, increase pricing or both. A break-even point more than 18 months in the future is a strong risk signal.

When to Use a Break-Even Analysis

Basically, a business will want to use a break-even analysis anytime it considers adding costs. These additional costs could come from starting a business, a merger or acquisition, adding or deleting products from the product mix, or adding locations or employees.

In other words, you should use a break-even analysis to determine the risk and value of any business investment, especially when one of these three events occurs:

1. Expanding a business

Break-even points (BEP) will help business owners/CFOs get a reality check on how long it will take an investment to become profitable. For example, calculating or modeling the minimum sales required to cover the costs of a new location or entering a new market.

2. Lowering pricing

Sometime businesses need to lower their pricing strategy to beat competitors in a specific market segment or product. So, when lowering pricing, businesses need to figure out how many more units they need to sell to offset or makeup a price decrease.

3. Narrowing down business scenarios

When making changes to the business, there are various scenarios and what-ifs on the table that complicate decisions about which scenario to go with. BEP will help business leaders reduce decision-making to a series of yes or no questions.

How Do You Calculate the Break-Even Point?

ERP and accounting software with managerial accounting features will typically calculate your BEP for you, but you may want to understand what goes into that equation.

Break-even analysis formula

Break-even quantity = Fixed costs / (Sales price per unit – Variable cost per unit)

You can also use our break-even analysis template.

Use Our Break-Even Analysis Template

Find your break-even point by using this break-even analysis template, customizable to your business.

Get the template

Break-even analysis example

Beth has dreams of opening a gourmet cupcake store. She does a break-even analysis to determine how many cupcakes she’ll have to sell to break even on her investment. She’s done the math, so she knows her fixed costs for one year are $10,000 and her variable cost per unit is $.50. She’s done a competitor study and some other calculations and determined her unit price to be $6.00.

$10,000 / ($6 – $0.50) = 1,819 cupcakes that Beth must sell in one year to break even

The Limitations of a Break-Even Analysis

The most important thing to remember is that break-even analysis does not consider market demand. Knowing that you need to sell 500 units to break even does not tell you if or when you can sell those 500 units. Don’t let your passion for the business idea or new product cause you to lose sight of that basic truth.

On the flip side, you’ll need to decide how much effort and time you’re willing to expend to reach the break-even point. For example, are you willing to invest a substantial percentage of your sales team’s time and effort over several months to reach the break-even point? Or, is producing and selling something else a better and more profitable use of time and effort?

If you find demand for the product is soft, consider changing your pricing strategy to move product faster. However, discounted pricing can actually raise your break-even point. If you’re not careful, you’ll move product faster at the lower price but will incur more variable costs to produce more units in order to reach your break-even point.

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How to Lower Your Break-Even Point

There are two basic ways to lower your break-even point: lower costs and raise prices. But neither should be done in a vacuum. Weigh your options carefully in pricing methods and consumer psychology to make sure you don’t sell more product but lose money in the bargain.

Further, consider all elements of costs, such as the associated quality and delivery, before slashing them to prevent damage to your brand. Outsourcing products or service can also reduce costs when demand or volume increase.

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The Break Even Analysis Concept in Business Essay

Breakeven analysis, interpretation of the breakeven analysis.

Breakeven analysis is a procedure used by business owners, auditors, accountants, and management staff. It depends on sorting and classifying costs that change when the production yield varies and costs not straightforwardly identified with the volume of generation production (Choudhary, Patnaik, Singh, & Kaushal, 2013). By implication, accountants can classify the firm’s cost of operations based on fixed costs and variable costs.

Thus, total variable costs and fixed costs are equated with the services revenue to ascertain the level of sales at which the hospital makes a profit or loss. This technique is called the breakeven analysis. The contribution margin is a cost bookkeeping technique that gives the organization a chance to decide the benefit of its assets and services (Bai et al., 2017). The expression “contribution margin” refers to a unit measurement of the hospital’s service operating margin. It is computed as the service value minus its aggregate variable expenses per unit. This metric enables an organization to assess distinctive zones of the business to decide the productivity of each service.

This technique is also used to decide when the investment will have the capacity to fund the majority of its costs and make a profit. With a goal to become active and streamline the utilization of assets with decreasing repayments, healthcare facilities are always probing for profitable endeavors (Finkler, Jones, & Kovner, 2013). Accountants utilized this analysis to ascertain if an underlying business will be an effective utilization of capital and a productive resource.

After a broad market examination, the associates discovered there is a unique requirement for a fertility facility in the territory. The start-up costs for the fertility and treatment facility was set at $9,788,000, which incorporates the contracting of doctors, anesthesiologists, medical caretakers, staff attendants, compensations, wages, payment for high-innovation hardware, and miscellaneous expenditures.

Based on the above assumption, different operating variables will be computed.

The breakeven point of the hospital sales = Fixed cost of operation / Service price per unit – Variable cost of operations.

Consequently, the breakeven point = Fixed cost of operations / Contribution margin per unit.

Mathematically, breakeven point per unit X = Fixed cost / (Price – Variable cost).

X = Breakeven point
F = Fixed costs
V = Variable cost per patient
Therefore, X = F / (P-V).

The patient acuity of the facility is clarified under simple, moderate and complex. Based on this classification, the number of visits is charged and the percentages recorded.

The descriptive demographics are computed below.

The contribution margin is a cost bookkeeping technique that gives the organization a chance to decide the benefit of its assets and services. The expression “contribution margin” refers to a unit measurement of the hospital’s service operating margin. It is computed as the service value minus its aggregate variable expenses per unit. This metric enables an organization to assess distinctive zones of the business to decide the productivity of each service.

Therefore, contribution margin = Services revenue – Variable expenditures.

Please note, the hospital’s variable costs per patient = $500.

The contribution margin can be calculated using the variable cost and the cost of service per patient.

Thus, simple service = 2000 – 500 = 1500.

The contribution margin for Simple patient acuity = $1,500.

Moderate service = 6,500- 500 = 6,000

The contribution margin for Moderate patient acuity = $6,000.

Complex service = 10,000 – 500 = 9,500

The contribution margin for Complex patient acuity = $9,500.

The descriptive result of the contribution margin is presented below.

The weighted average contribution margin can be used to calculate the cost per visit. The weighted average contribution margin = Percentage patients visit x contribution margin. Thus, the patient acuity service will be used to determine the weighted average contribution margin.

Simple service = 15% x 1500 = $225

Moderate service = 60% x 6000 = $3600

Complex service = 25% x 9500 = $2375

The descriptive result of the weighted contribution margin is presented below.

Based on the result, the total weighted average contribution margin = Sum of each weighted average contribution margin.

Total weighted average contribution margin = 225 + 3600 + 2375 = $6,200

Thus, the breakeven analysis is computed using the number of visits.

Therefore, number of patient visits to the fertility clinic = Fixed cost / Total weighted average contribution margin.

Mathematically, Q = F/TWACM

Where Q = Number of patient visits

F = Fixed cost of visits per year

TWACM = Total weighted average contribution margin

Fixed cost = $9,788,000

Total weighted average contribution margin = $6,200.

Q = 9788000/6200

Number of patients visit to breakeven = 1579.

This figure can be used to compute the breakeven value for each patient acuity.

Simple patient acuity = 1579 x 15% = 237

Moderate patient acuity = 1579 x 60% = 947

Complex patient acuity = 1579 x 25% = 395

From the case study, the management of the fertility clinic expects 7488 visits per year.

Working days = 312 days

The planned visits and the number of working operating days can be used to calculate the number of patient visits per day.

Patients visits per day = 7488/312 = 24

Thus, 24 patients are treated daily.

The number of patient visits per year = 1579

Therefore, the breakeven per day = 1579/24 = 66 days.

To propel the hospital’s mission and objectives the fertility facility can breakeven in the first year of business with extra income in the preceding fiscal year. While the clinic’s patient acuity can be anticipated, volume levels can be realized and expanded through advertising and a robust referral framework that would balance any budgetary risk. Given these situations, it is suggested that this fertility clinic continues with the plans to execute an outpatient facility in this service territory.

Given the above business proposition, the fertility facility will take 66 days to break even, leaving 246 extra days to generate profit for future undertakings. Based on this analysis, the business is viable and profitable. If the hospital operates for 66 days, they will make the costs of operation. By implication, the remaining number of days would be used to accumulate profit.

Bai, Y., Gu, C., Chen, Q., Xiao, J., Liu, D., & Tang, S. (2017). The challenges that head nurses confront on financial management today: A qualitative study. International Journal of Nursing Sciences, 4 (1), 122-127. Web.

Choudhary, P., Patnaik, S., Singh, M., & Kaushal, G. (2013). Break-even analysis in healthcare setup. International Journal of Research Foundation of Hospital and Health Care Administration, 1 (1), 29-32. Web.

Finkler, S. A., Jones, C., & Kovner, C. (2013). Financial management for nurse managers and executives . (4th ed.) St. Louis: Elsevier.

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breakeven analysis

Quick reference.

The study of the interrelationships between costs, sales volume, and prices at various levels of activity. The breakeven point is the time at which the fixed and variable costs involved in the production and distribution of a product are matched by its overall sales: the point at which total costs are exactly equal to revenues. Beyond this point, when revenues exceed total costs, there lies profitability.

To understand the breakeven analysis it is necessary to appreciate fixed and variable costs:

Examples of costs that are typically ‘fixed’: • salaries of personnel • sales administration • advertising investments (‘*above-the-line’) • capital costs, such as building and plant

• salaries of personnel

• sales administration

• advertising investments (‘*above-the-line’)

• capital costs, such as building and plant

Examples of costs that are typically ‘variable’: • commissions to agents and brokers and salesmen • delivery costs • after-sales maintenance and service • credit • order processing • invoicing • non-advertising marketing costs (‘*below-the-line’)

• commissions to agents and brokers and salesmen

• delivery costs

• after-sales maintenance and service

• order processing

• invoicing

• non-advertising marketing costs (‘*below-the-line’)

In physical volume terms, the usual formula for the breakeven point is:breakeven point=Fixed cost(Sales revenue-Variable cost)/Units sold

The main purposes of a breakeven analysis for a marketer are to provide information about cost behaviour for new product marketing activities and to determine specific decision-making. A marketer of a new product needs to know what volume of sales is needed at any given budgeted sales price in order to break even. The product marketer needs to identify the ‘risk’ in the budget by measuring the margin and to calculate the effects on profit of changes in variable cost, cost of sales ratios, sales price, and volume and product mix.

Care should be taken in applying the breakeven analysis to real-life marketing, particularly in a dynamic market environment. The breakeven point contains some risky assumptions: for example, sales prices are assumed to be constant and fixed costs are assumed to remain stable. A breakeven calculation only holds for circumstances where efficiency remains constant, notwithstanding increased productivity. Since there is a direct relationship between purchases and sales, then all that is manufactured can actually be sold and the sales and marketing mix will be maintained at the same levels throughout the initial launch.

Although the breakeven analysis lends itself to product marketing, it can also be applied to services. For example, if a company is arranging a large entertainment event, it is important to know how the fixed and variable costs of producing and marketing the event are linked to the sale of tickets to the event. Dividing the fixed and variable costs of an event will give an indication of how many tickets need to be sold and at what price in order to make the event break even.

Breakeven analysis

From: breakeven analysis in A Dictionary of Marketing »

Subjects: Social sciences — Business and Management

Break-Even Analysis: Introduction, Assumptions and Limitations

In this article we will discuss about:- 1. Introduction to Break-Even Analysis 2. Assumptions of Break-Even Analysis 3. Limitations.

Introduction to Break-Even Analysis:

Break-even analysis is of vital importance in determining the practical application of cost functions. It is a function of three factors, i.e., sales volume, cost and profit. It aims at classifying the dynamic relationship existing between total cost and sale volume of a company.

Hence it is also known as “cost-volume-profit analysis”. It helps to know the operating condition that exists when a company ‘breaks-even’, that is when sales reach a point equal to all expenses incurred in attaining that level of sales.

Assumptions of Break-Even Analysis:

The break-even analysis is based on the following set of assumptions:

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(i) The total costs may be classified into fixed and variable costs. It ignores semi-variable cost.

(ii) The cost and revenue functions remain linear.

(iii) The price of the product is assumed to be constant.

(iv) The volume of sales and volume of production are equal.

(v) The fixed costs remain constant over the volume under consideration.

(vi) It assumes constant rate of increase in variable cost.

(vii) It assumes constant technology and no improvement in labour efficiency.

(viii) The price of the product is assumed to be constant.

(ix) The factor price remains unaltered.

(x) Changes in input prices are ruled out.

(xi) In the case of multi-product firm, the product mix is stable.

Limitations of Break-Even Analysis:

We may now mention some important limitations which ought to be kept in mind while using break-even analysis:

1. In the break-even analysis, we keep everything constant. The selling price is assumed to be constant and the cost function is linear. In practice, it will not be so.

2. In the break-even analysis since we keep the function constant, we project the future with the help of past functions. This is not correct.

3. The assumption that the cost-revenue-output relationship is linear is true only over a small range of output. It is not an effective tool for long-range use.

4. Profits are a function of not only output, but also of other factors like technological change, improvement in the art of management, etc., which have been overlooked in this analysis.

5. When break-even analysis is based on accounting data, as it usually happens, it may suffer from various limitations of such data as neglect of imputed costs, arbitrary depreciation estimates and inappropriate allocation of overheads. It can be sound and useful only if the firm in question maintains a good accounting system.

6. Selling costs are specially difficult to handle break-even analysis. This is because changes in selling costs are a cause and not a result of changes in output and sales.

7. The simple form of a break-even chart makes no provisions for taxes, particularly corporate income tax.

8. It usually assumes that the price of the output is given . In other words, it assumes a horizontal demand curve that is realistic under the conditions of perfect competition.

9. Matching cost with output imposes another limitation on break-even analysis. Cost in a particular period need not be the result of the output in that period.

10. Because of so many restrictive assumptions underlying the technique, computation of a breakeven point is considered an approximation rather than a reality.

Break-Even Analysis : Methods, Margin of Safety and Uses
Break-Even Analysis’s Chart | Profits | Economics
Advantages of Break Even Analysis | Profits | Economics
Top 10 Managerial Uses of Break-Even Analysis

Break-even Analysis

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Break-even analysis is concerned with predicting costs, volume and profit as the level of activity changes. The theory of break-even analysis is derived from the principles of marginal costing, and the assumptions and definitions of fixed and variable costs and their behaviours discussed in earlier chapters are used.

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Hussey, R. (1989). Break-even Analysis. In: Cost and Management Accounting. Macmillan Professional Masters. Palgrave, London. https://doi.org/10.1007/978-1-349-19930-3_15

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What Is Break Even Analysis

Break-Even Analysis

A break-even analysis is an economic tool that is used to determine the cost structure of a company or the number of units that need to be sold to cover the cost. Break-even is a circumstance where a company neither makes a profit nor loss but recovers all the money spent.

The break-even analysis is used to examine the relation between the fixed cost, variable cost, and revenue. Usually, an organisation with a low fixed cost will have a low break-even point of sale.

Importance of Break-Even Analysis

Manages the size of units to be sold: With the help of break-even analysis, the company or the owner comes to know how many units need to be sold to cover the cost. The variable cost and the selling price of an individual product and the total cost are required to evaluate the break-even analysis.
Budgeting and setting targets: Since the company or the owner knows at which point a company can break-even, it is easy for them to fix a goal and set a budget for the firm accordingly. This analysis can also be practised in establishing a realistic target for a company.
Manage the margin of safety: In a financial breakdown, the sales of a company tend to decrease. The break-even analysis helps the company to decide the least number of sales required to make profits. With the margin of safety reports, the management can execute a high business decision.
Monitors and controls cost: Companies’ profit margin can be affected by the fixed and variable cost. Therefore, with break-even analysis, the management can detect if any effects are changing the cost.
Helps to design pricing strategy: The break-even point can be affected if there is any change in the pricing of a product. For example, if the selling price is raised, then the quantity of the product to be sold to break-even will be reduced. Similarly, if the selling price is reduced, then a company needs to sell extra to break-even.

Components of Break-Even Analysis

Fixed costs: These costs are also known as overhead costs. These costs materialise once the financial activity of a business starts. The fixed prices include taxes, salaries, rents, depreciation cost, labour cost, interests, energy cost, etc.
Variable costs: These costs fluctuate and will decrease or increase according to the volume of the production. These costs include packaging cost, cost of raw material, fuel, and other materials related to production.

Uses of Break-Even Analysis

New business: For a new venture, a break-even analysis is essential. It guides the management with pricing strategy and is practical about the cost. This analysis also gives an idea if the new business is productive.
Manufacture new products: If an existing company is going to launch a new product, then they still have to focus on a break-even analysis before starting and see if the product adds necessary expenditure to the company.
Change in business model: The break-even analysis works even if there is a change in any business model like shifting from retail business to wholesale business. This analysis will help the company to determine if the selling price of a product needs to change.

Break-Even Analysis Formula

Break-even point = Fixed cost/-Price per cost – Variable cost

Example of break-even analysis

Company X sells a pen. The company first determined the fixed costs, which include a lease, property tax, and salaries. They sum up to ₹1,00,000. The variable cost linked with manufacturing one pen is ₹2 per unit. So, the pen is sold at a premium price of ₹10.

Therefore, to determine the break-even point of Company X, the premium pen will be:

Break-even point = Fixed cost/Price per cost – Variable cost

= ₹1,00,000/(₹12 – ₹2)

= 1,oo,000/10

Therefore, given the variable costs, fixed costs, and selling price of the pen, company X would need to sell 10,000 units of pens to break-even.

The above-mentioned is the concept of ‘Break-Even Analysis’. To know more, stay tuned to our website.

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Financial Health

What Is a Break-Even Analysis?

by James Woodruff James Woodruff has been a ... more
November 14, 2019
2 Minute Read
Home > Blog > Financial Health > What Is a Break-Even Analysis?

It can take time for your small business to turn a profit. When you near that stage, it’s critical to know your break-even sales volume. It’s a benchmark performance metric for every small business because it establishes the target needed to cover costs and make a profit.

A break-even analysis results in neither a profit nor a loss. Instead, it determines the number of sales needed to cover all variable and fixed costs. It calculates the minimum number of units to sell and the sales volume needed to pay all expenses before making a profit.

What Is the Break-Even Analysis Formula?

The formula for break-even analysis is:

Break-even volume in units = Fixed Costs/(Revenue per unit – Variable costs per unit)

Fixed costs include rent, utilities, insurance and administrative wages. Revenue is the selling price per unit. Variable costs are the materials and direct labor of production.

Two retail business owners calculate costs with the break-even analysis

How Is Break-Even Calculated?

As an example, suppose your company manufactures sneakers and has the following production figures:

Total fixed costs: $474,000
Variable costs per pair of sneakers: $65
Sales price per pair: $95

The break-even point in unit volume is:

Break-even units = $474,000/($95 – $65) = 15,800 pairs of sneakers

The break-even sales volume is:

Break-even sales = Unit sales price X break-even units = $95 X 15,800 = $1,501,000

How to Use Break-Even Calculations

A break-even analysis helps to manage other aspects of your business. For example, it can:

Set budgets: Determine the effects of changes in fixed and variable costs.
Motivate sales staff: With break-even as the original target, sales employees can see the results of extra sales on profits and the potential for more commissions.
Monitor and control costs: Break-even sets cost control points.
Decide a pricing strategy: With break-even charts, managers can gauge the impact of changing selling prices on sales volume and profitability.

What is a break-even analysis going to reveal for your business? Try out these formulas yourself, check out the SCORE break-even analysis template, or give your accountant a call to determine this critical calculation.

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Essay on break-even analysis (bea) | microeconomics.

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In this essay we will discuss about Break-Even Analysis (BEA). After reading this essay you will learn about: 1. Meaning of Break-Even Analysis 2. The Graphical Method or Break-Even Chart 3. Margin of Safety 4. The Equation Method 5. The Contribution Margin 6. Assumptions 7. Limitations 8. Uses.

Essay on the Uses of Break-Even Analysis

Essay # 1. Meaning of Break-Even Analysis :

The break-even analysis (BEA) indicates at what level total costs and total revenue are in equilibrium. It is an analytical technique that is used to identify the level of output and sales volume at which the firm ‘breaks- even’, i.e. the revenues are sufficient to cover all costs.

BEA establishes the relationship among fixed and variable costs of production, volume of production, value of output, sales value and profit. It is, therefore, also known as Cost-Volume-Project (CVP) analysis. Three approaches are commonly used to solve the BE problems.

Essay # 3. Margin of Safety :

This type of BEA can be used to calculate the level of sales which must be attained to avoid loss or to calculate the margin of safety (MS). MS is the difference between the firm’s actual level of sales and sales at the BE point, as shown in the Figure 1. It is expressed as: MS = Actual sales revenue-BE sales.

However, firms calculate the MS in terms of ratio as:

MS Ratio = MS/Actual Sales

The MS is an indicator of the strength of a firm. If the margin is large, it shows that the firm can make profit even if it has to face difficulties. On the other hand, if the margin is small, a small reduction in sales can lead to loss. MS is nil at the BE point because actual sales volume is equal to the cost.

Essay # 4. The Equation Method :

The same results can be arrived at by the equation method:

Profit = TR – TVC – TFC

where TR = Price x Quantity

TVC = AVC x Quantity TFC is a constant)

BE point is where profit = 0

And 0 = (Price x Quantity) – (AVC x Quantity) – TFC.

Rearranging the above equation:

BE Quantity = TFC /Price-AVC

Essay # 5. The Contribution Margin:

Price – AVC in the above equation represents the contribution margin. Thus the above equation can be written as

BE. Point = TFC/Contribution Margin

Fig. 2 illustrates the contribution margin where TVC is the total variable cost. TFC (total fixed cost) is added to TVC in order to arrive at TC (total cost). The difference between TR and TVC is the contribution margin.

Suppose TFC = Rs150

AVC = Rs 12

(Price) P = Rs 15

BE Quantity = 150/15-12=150/3 =50 units

Now TR = P × Q= 15 × 50= Rs 750 TC = TFC + TVC = 150 + (12×50) = Rs 750 Thus BE point is 50 units where TR (Rs 750) = TC (Rs 750)

Essay # 6. Assumptions of Break-Even Analysis :

The break-even analysis is based on the following assumptions:

1. The cost and revenue functions are linear.

2. Total cost is divided into fixed and variable costs.

3. Fixed cost is constant.

4. Variable costs change proportionately with output.

5. The number of units produced and sold of the product is identical. It means that there is no opening or closing stock.

6. The sale price is constant.

7. Factor prices are constant.

8. Costs are affected only by the quantity produced.

9. There is no change in technology and productivity.

10. There is only one product. In case of multiproduct, the product-mix remains constant.

Essay # 7. Limitations of Break-Even Analysis :

The break-even analysis has certain limitations which are discussed as under:

a. Constant Price:

The straight line TR curve assumes that every level of output can be sold at the same price. This is unrealistic because product prices do not remain constant as output increases. In fact, they change frequently.

b. Constant Cost:

It is also assumed that whatever the level of output, AVC remains the same. This suggests that there is no limit to output which the firm can produce. This is again highly unrealistic. The above two assumptions make the BE analysis static in nature.

c. Limitless Profits:

This analysis assumes that profits are a function of output. This suggests that profits increase without limit as the level of output rises. In fact, this never happens because profits are influenced by technological changes, improved management, higher productivity, changes in the scale of fixed factors, etc.

d. Ignores Selling Costs:

It is based only on production costs and neglects selling costs.

e. Data Limitations:

As the BE analysis is based on accounting data, it suffers from such limitations of data as neglect of imputed costs, arbitrary depreciation estimates, inappropriate allocation of overhead costs etc.

f. Limited Products:

This analysis is based on a limited range of products and area. The present day firm produces many products and has many departments or plants which cannot be lumped together and presented on a single BE chart. So the scope of this analysis is limited to a single product of a particular business firm.

g. Short-Run Analysis:

The BEA can be used only during the short run. As such, it is not an effective tool for the long run.

h. Ignores Elasticity of Demand:

It ignores the concept of elasticity of demand and the possibility that different prices may lead to different levels of demand.

i. Ignores Diminishing Returns:

It ignores the principle of diminishing returns which every firm has to keep in view for breaking-even.

Essay # 8. Uses of Break-Even Analysis :

Despite the above noted limitations, the BEA is a useful device for decision making by a firm. It possesses the following advantages in planning and control of business activity.

(i) Product Planning:

It helps the firm in product planning based on its estimated revenue and costs. It can decide about adding a new product line or dropping an existing product line.

(ii) Activity Planning:

The firm can plan about the expansion or reduction of its plant capacity based on its BE analysis.

(iii) Profit Planning:

This analysis helps the firm to plan about the profit level to be earned. This estimate is based on the projections of revenue and costs for the future.

(iv) Safety Margin:

It can be used in determining the safety margin relating to decline in sales without incurring losses.

(v) Target Capacity:

It helps the firm in determining its target sales quantity in order to benefit from its minimum average variable costs of production.

(vi) Price and Cost Changes:

Though this analysis assumes prices and costs as constant, yet it can be used in analysing the effect of changes in prices and costs on the profits of a firm.

(vii) Price Decision:

The firm can take decision about the selling price to be fixed based on its expected revenue and costs in order to earn profits.

(viii) Promotion Decision:

It can decide about the best promotion techniques for the product within the estimated break-even point so as to increase its sales volume.

(ix) Distribution Decision:

Similarly, it can take decision about the best possible distribution system which increases its sales, i.e. to have several distributors or a single distributor in a city or region.

(x) Dividend Decision:

It is on the basis of the BE point that the firm can decide about the payment of dividend to its shareholders. It is only when the firm starts earning profits beyond the BE point that it decides about the quantum of dividend to be paid to its shareholders.

Break-Even Analysis : Another Powerful Controlling Tool for Management
Relationship between Break-Even Analysis, P/V Ratio and Margin of Safety

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Essay on Break Even Analysis | Engineering Economics

After reading this essay you will learn about:- 1. Introduction to Break Even Analysis 2. Assumptions Underlying Break Even Analysis 3. Applications 4. Non-Linear Break-Even Analysis 5. Limitations.

Essay # 1. Introduction to Break Even Analysis :

This is also known as cost analysis. Break even analysis is concerned with finding the point at which revenues and costs are exactly equal. This point is known as BREAK-EVEN-POINT. Thus this is a volume of output at which neither a profit is made nor a loss is incurred. Therefore production or sale must not be allowed to fall beyond this point. This analysis can be carried out either algebraically or graphically.

Break-Even Chart :

A breakeven chart is a graphical representation of the relationship between costs and revenue at a given time, and determines the break-even-point and profit potential under varying conditions of output and cost.

Functions of Breakeven Chart :

(i) To represent economical position of production on graph.

ADVERTISEMENTS:

(ii) To for tell likely profits or losses at various levels of output.

(iii) To help the management to decide the production level.

(iv) To indicate margin of safety.

Essay # 2. Assumptions Underlying Break Even Analysis :

1. All the costs are either perfectly variable or absolutely fixed over the entire range of production.

2. All revenue is perfectly variable with the physical volume of production.

3. The volume of sales and the volume of production are equal.

4. In case of multi product firms, the product mix should be stable.

Essay # 3. Applications of Break Even Analysis :

Break even analysis not only highlights the areas of economic strength and weaknesses in the firm but also helps in finding out the ways which can enhance its profitability.

With the help of this analysis management of a production firm can take decisions related to the following:

(i) Safety margin. It decides the extent to which the firm can afford to decline in sales, before it starts incurring losses.

(ii) Volume needed to attain target profit. –

(iii) Change in price, and its effect.

(iv) Whether to expand production capacity or not.

(v) Whether to add a new product or drop production of any product.

(vi) Whether to make or buy.

(vii) Selection of production machinery so as to get maximum profit for a particular volume of the product out of the available machineries.

(viii) Improving profit performance by

(a) Increasing the volume of sales, and or

(b) Increasing the selling prices, and or

(d) Reducing the fixed costs.

Fixed costs in a factory is Rs.10,000 per year, the variable costs are Rs.2.00 per unit and the selling price is Rs.4.00 per unit, calculate B.E.P.

The Break-even point has shifted from point 0 to 1. If there is no change in price and volume of profit is maintained or there will be a rise in the sales price, if there is no change in the sales volume, provided profit is maintained.

5. Whether to Accept an Order or Not :

If extra capacity to produce a product is variable then sometimes management has to decide whether to accept another order at a price with less than the initial selling price. For example, a plant is operating on its 50% of full capacity. A buyer offered to buy 4000 units at Rs.5 per unit while the average cost is Rs.6. Now the problem is whether to accept this order or not.

The other details of the product are:

Total capacity = 20,000 units

Present output = 10,000 units

Direct material cost = Rs.10,000

Direct labour cost = Rs.10,000

Fixed costs = Rs.40,000

In this question, one can find that additional cost of making these 4000 units is Rs.4000 for material cost and Rs.4000 for labour cost (total Rs.8000) and the revenue from sales would be;

Rs.4000 × 5 = Rs.20,000

Thus the concern will save,

Rs.20,000 – Rs.8,000 = Rs.12,000

So, it would be profitable to accept anything more than Rs.2 per unit which is the direct cost per unit. There is only danger that, if other consumers come to know that this product is being sold at a lower price, they may also then demand supply at the lower price or otherwise they may not be further interested to buy from this concern. Therefore, in such cases acceptance should be kept secret.

6. Whether to Add or Drop a Product Line :

In this case, following two situations arise:

(a) Should a new product be added in view of the estimated revenue and cost?

(b) If the product is dropped from the line, what would be consequent effects on revenue and costs?

The following data from a plant is available:

Thus in this way Break Even Point theory can be applied to solve several problems of an industry such as minimum quantity to be manufactured to avoid losses, which machine will be profitable for a particular production etc. This theory is used as a tool by management to aid in making decisions.

Essay # 4. Non-Linear Break-Even Analysis :

Till now, we have discussed linear break-even analysis, but in practice, some-times unit variable costs (V.C) decreases as the quantity level rises, this results total curve (TC) curve as a non-linear curve as shown below:

If nonlinear R (Revenue) or TC (Total cost) models are used, there may be more than one break-even point. Figure 69.9 presents this situation for two break-even points.

In this case, the maximum profit is obtained by operating at a quantity Q p , which occurs between the two break-even points and when the distance between the R and TC relations is greatest.

Break Even Analysis as a Tool for Decision-Making :

This analysis is used as a tool by management to aid in making decisions:

1. It can be applied to solve several problems of an industry such as minimum quantity to manufacture to avoid losses which machine will be profitable for a particular production etc.

2. It helps to determine the unit cost of a product, corresponding to any particular quantity of production.

3. It suggests about the selling price fixation.

4. It informs about the percentage financial yield for a project.

5. It informs about the fact that industry must run at its scheduled target capacity to get advantage of the optimal cost of production per unit.

(a) What is break-even analysis? What information does it provide to the management?

(b) The fixed costs of a company are Rs.350,000. The net sales amount to Rs.600,000 annually. The direct costs are 35% of sales in rupees.

Determine the following:

(i) The “break-even point” in terms of sales rupees,

(ii) The sales required to earn a profit of Rs.80,000.

(a) Break-Even Analysis:

Equipment’s are used to produce products at profitable rate, so that the products can stand competition, replacement decision is not an easy job, it requires several consideration. As it involves large capital investment, hence a wrong decision may adversely effect the profitability of whole concern.

Therefore, a scientific approach to solve this problem is essential. For this purpose the theory of Break Even Point is very helpful. The break-even point of any two variable situations is the point or the value at which they become equal as the result of a common variable.

Let cost be the common variable in two situations 1 and 2, then cost equations will be

C 1 = f 1 (x) … a function of (x) …(1)

c 2 = f 2 (x)… another function of (x) …(2)

To solve for the value of x, let c 1 = c 2

i.e. f 1 (x) = f 2 (x) …(3)

Equation (3) can be solved for obtaining the value of (x). The value of x making the cost equal in both the situations is called “Break Even Value” (Fig. 69.1) Below the value of x, one situation will be economical while above it another situation will be economical.

(b) Break-Even Point, B.E.P.:

By Stephen Marche

Mr. Marche is the author of “The Next Civil War.”

“Not one man in America wanted the Civil War, or expected or intended it,” Henry Adams, grandson of John Quincy Adams, declared at the beginning of the 20th century. What may seem inevitable to us in hindsight — the horrifying consequences of a country in political turmoil, given to violence and rived by slavery — came as a shock to many of the people living through it. Even those who anticipated it hardly seemed prepared for its violent magnitude. In this respect at least, the current division that afflicts the United States seems different from the Civil War. If there ever is a second civil war, it won’t be for lack of imagining it.

The most prominent example arrives this week in the form of an action blockbuster titled “Civil War.” The film, written and directed by Alex Garland, presents a scenario in which the government is at war with breakaway states and the president has been, in the eyes of part of the country, delegitimized. Some critics have denounced the project, arguing that releasing the film in this particular election year is downright dangerous. They assume that even just talking about a future national conflict could make it a reality, and that the film risks becoming a self-fulfilling prophecy. This is wrong.

Not only does this criticism vastly overrate the power of the written word or the moving image, but it looks past the real forces sending the United States toward ever-deeper division: inequality; a hyperpartisan duopoly; and an antiquated and increasingly dysfunctional Constitution. Mere stories are not powerful enough to change those realities. But these stories can wake us up to the threats we are facing. The greatest political danger in America isn’t fascism, and it isn’t wokeness. It’s inertia. America needs a warning.

The reason for a surge in anxiety over a civil war is obvious. The Republican National Committee, now under the control of the presumptive nominee, has asked job candidates if they believe the 2020 election was stolen — an obvious litmus test. Extremism has migrated into mainstream politics, and certain fanciful fictions have migrated with it. In 1997, a group of Texas separatists were largely considered terrorist thugs and their movement, if it deserved that title, fizzled out after a weeklong standoff with the police. Just a few months ago, Texas took the federal government to court over control of the border. Armed militias have camped out along the border. That’s not a movie trailer. That’s happening.

But politicians, pundits and many voters seem not to be taking the risk of violence seriously enough. There is an ingrained assumption, resulting from the country’s recent history of global dominance coupled with a kind of organic national optimism, that in the United States everything ultimately works out. While right-wing journalists and fiction writers have been predicting a violent end to the Republic for generations — one of the foundational documents of neo-Nazism and white supremacy is “The Turner Diaries” from 1978, a novel that imagines an American revolution that leads to a race war — their writings seem more like wish fulfillment than like warnings.

When I attended prepper conventions as research for my book, I found their visions of a collapsed American Republic suspiciously attractive: It’s a world where everybody grows his own food, gathers with family by candlelight, defends his property against various unpredictable threats and relies on his wits. Their preferred scenario resembled, more than anything, a sort of postapocalyptic “Little House on the Prairie.”

We’ve seen more recent attempts to grapple with the possibility of domestic conflict in the form of sober-minded political analysis. Now the vision of a civil war has come to movie screens. We’re no longer just contemplating a political collapse, we’re seeing its consequences unfold in IMAX.

“Civil War” doesn’t dwell on the causes of the schism. Its central characters are journalists and the plot dramatizes the reality of the conflict they’re covering: the fear, violence and instability that a civil war would inflict on the lives of everyday Americans.

That’s a good thing. Early on when I was promoting my book, I remember an interviewer asking me whether a civil war wouldn’t be that terrible an option; whether it would help clear the air. The naïveté was shocking and, to me, sickening. America lost roughly 2 percent of its population in the Civil War. Contemplating the horrors of a civil war — whether as a thought experiment or in a theatrical blockbuster — helps counteract a reflexive sense of American exceptionalism. It can happen here. In fact, it already has.

One of the first people to predict the collapse of the Republic was none other than George Washington. “I have already intimated to you the danger of parties in the state, with particular reference to the founding of them on geographical discriminations,” he warned in his Farewell Address. “This spirit, unfortunately, is inseparable from our nature.” This founder of the country devoted much of one of his most important addresses, at the apex of his popularity, to warning about the exact situation the United States today finds itself in: a hyper-partisanship that puts party over country and risks political collapse. Washington knew what civil war looked like.

For those Americans of the 1850s who couldn’t imagine a protracted, bloody civil war, the reason is simple enough: They couldn’t bear to. They refused to see the future they were part of building. The future came anyway.

The Americans of 2024 can easily imagine a civil war. The populace faces a different question and a different crisis: Can we forestall the future we have foreseen? No matter the likelihood of that future, the first step in its prevention is imagining how it might come to pass, and agreeing that it would be a catastrophe.

Stephen Marche is the author of “The Next Civil War.”

Source photographs by Yasuhide Fumoto, Richard Nowitz and stilllifephotographer, via Getty Images.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips . And here’s our email: [email protected] .

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What the data says about abortion in the U.S.

Pew Research Center has conducted many surveys about abortion over the years, providing a lens into Americans’ views on whether the procedure should be legal, among a host of other questions.

In a Center survey conducted nearly a year after the Supreme Court’s June 2022 decision that ended the constitutional right to abortion , 62% of U.S. adults said the practice should be legal in all or most cases, while 36% said it should be illegal in all or most cases. Another survey conducted a few months before the decision showed that relatively few Americans take an absolutist view on the issue .

Find answers to common questions about abortion in America, based on data from the Centers for Disease Control and Prevention (CDC) and the Guttmacher Institute, which have tracked these patterns for several decades:

How many abortions are there in the U.S. each year?

How has the number of abortions in the u.s. changed over time, what is the abortion rate among women in the u.s. how has it changed over time, what are the most common types of abortion, how many abortion providers are there in the u.s., and how has that number changed, what percentage of abortions are for women who live in a different state from the abortion provider, what are the demographics of women who have had abortions, when during pregnancy do most abortions occur, how often are there medical complications from abortion.

This compilation of data on abortion in the United States draws mainly from two sources: the Centers for Disease Control and Prevention (CDC) and the Guttmacher Institute, both of which have regularly compiled national abortion data for approximately half a century, and which collect their data in different ways.

The CDC data that is highlighted in this post comes from the agency’s “abortion surveillance” reports, which have been published annually since 1974 (and which have included data from 1969). Its figures from 1973 through 1996 include data from all 50 states, the District of Columbia and New York City – 52 “reporting areas” in all. Since 1997, the CDC’s totals have lacked data from some states (most notably California) for the years that those states did not report data to the agency. The four reporting areas that did not submit data to the CDC in 2021 – California, Maryland, New Hampshire and New Jersey – accounted for approximately 25% of all legal induced abortions in the U.S. in 2020, according to Guttmacher’s data. Most states, though, do have data in the reports, and the figures for the vast majority of them came from each state’s central health agency, while for some states, the figures came from hospitals and other medical facilities.

Discussion of CDC abortion data involving women’s state of residence, marital status, race, ethnicity, age, abortion history and the number of previous live births excludes the low share of abortions where that information was not supplied. Read the methodology for the CDC’s latest abortion surveillance report , which includes data from 2021, for more details. Previous reports can be found at stacks.cdc.gov by entering “abortion surveillance” into the search box.

For the numbers of deaths caused by induced abortions in 1963 and 1965, this analysis looks at reports by the then-U.S. Department of Health, Education and Welfare, a precursor to the Department of Health and Human Services. In computing those figures, we excluded abortions listed in the report under the categories “spontaneous or unspecified” or as “other.” (“Spontaneous abortion” is another way of referring to miscarriages.)

Guttmacher data in this post comes from national surveys of abortion providers that Guttmacher has conducted 19 times since 1973. Guttmacher compiles its figures after contacting every known provider of abortions – clinics, hospitals and physicians’ offices – in the country. It uses questionnaires and health department data, and it provides estimates for abortion providers that don’t respond to its inquiries. (In 2020, the last year for which it has released data on the number of abortions in the U.S., it used estimates for 12% of abortions.) For most of the 2000s, Guttmacher has conducted these national surveys every three years, each time getting abortion data for the prior two years. For each interim year, Guttmacher has calculated estimates based on trends from its own figures and from other data.

The latest full summary of Guttmacher data came in the institute’s report titled “Abortion Incidence and Service Availability in the United States, 2020.” It includes figures for 2020 and 2019 and estimates for 2018. The report includes a methods section.

In addition, this post uses data from StatPearls, an online health care resource, on complications from abortion.

An exact answer is hard to come by. The CDC and the Guttmacher Institute have each tried to measure this for around half a century, but they use different methods and publish different figures.

The last year for which the CDC reported a yearly national total for abortions is 2021. It found there were 625,978 abortions in the District of Columbia and the 46 states with available data that year, up from 597,355 in those states and D.C. in 2020. The corresponding figure for 2019 was 607,720.

The last year for which Guttmacher reported a yearly national total was 2020. It said there were 930,160 abortions that year in all 50 states and the District of Columbia, compared with 916,460 in 2019.

How the CDC gets its data: It compiles figures that are voluntarily reported by states’ central health agencies, including separate figures for New York City and the District of Columbia. Its latest totals do not include figures from California, Maryland, New Hampshire or New Jersey, which did not report data to the CDC. ( Read the methodology from the latest CDC report .)
How Guttmacher gets its data: It compiles its figures after contacting every known abortion provider – clinics, hospitals and physicians’ offices – in the country. It uses questionnaires and health department data, then provides estimates for abortion providers that don’t respond. Guttmacher’s figures are higher than the CDC’s in part because they include data (and in some instances, estimates) from all 50 states. ( Read the institute’s latest full report and methodology .)

While the Guttmacher Institute supports abortion rights, its empirical data on abortions in the U.S. has been widely cited by groups and publications across the political spectrum, including by a number of those that disagree with its positions .

These estimates from Guttmacher and the CDC are results of multiyear efforts to collect data on abortion across the U.S. Last year, Guttmacher also began publishing less precise estimates every few months , based on a much smaller sample of providers.

The figures reported by these organizations include only legal induced abortions conducted by clinics, hospitals or physicians’ offices, or those that make use of abortion pills dispensed from certified facilities such as clinics or physicians’ offices. They do not account for the use of abortion pills that were obtained outside of clinical settings .

(Back to top)

A line chart showing the changing number of legal abortions in the U.S. since the 1970s.

The annual number of U.S. abortions rose for years after Roe v. Wade legalized the procedure in 1973, reaching its highest levels around the late 1980s and early 1990s, according to both the CDC and Guttmacher. Since then, abortions have generally decreased at what a CDC analysis called “a slow yet steady pace.”

Guttmacher says the number of abortions occurring in the U.S. in 2020 was 40% lower than it was in 1991. According to the CDC, the number was 36% lower in 2021 than in 1991, looking just at the District of Columbia and the 46 states that reported both of those years.

(The corresponding line graph shows the long-term trend in the number of legal abortions reported by both organizations. To allow for consistent comparisons over time, the CDC figures in the chart have been adjusted to ensure that the same states are counted from one year to the next. Using that approach, the CDC figure for 2021 is 622,108 legal abortions.)

There have been occasional breaks in this long-term pattern of decline – during the middle of the first decade of the 2000s, and then again in the late 2010s. The CDC reported modest 1% and 2% increases in abortions in 2018 and 2019, and then, after a 2% decrease in 2020, a 5% increase in 2021. Guttmacher reported an 8% increase over the three-year period from 2017 to 2020.

As noted above, these figures do not include abortions that use pills obtained outside of clinical settings.

Guttmacher says that in 2020 there were 14.4 abortions in the U.S. per 1,000 women ages 15 to 44. Its data shows that the rate of abortions among women has generally been declining in the U.S. since 1981, when it reported there were 29.3 abortions per 1,000 women in that age range.

The CDC says that in 2021, there were 11.6 abortions in the U.S. per 1,000 women ages 15 to 44. (That figure excludes data from California, the District of Columbia, Maryland, New Hampshire and New Jersey.) Like Guttmacher’s data, the CDC’s figures also suggest a general decline in the abortion rate over time. In 1980, when the CDC reported on all 50 states and D.C., it said there were 25 abortions per 1,000 women ages 15 to 44.

That said, both Guttmacher and the CDC say there were slight increases in the rate of abortions during the late 2010s and early 2020s. Guttmacher says the abortion rate per 1,000 women ages 15 to 44 rose from 13.5 in 2017 to 14.4 in 2020. The CDC says it rose from 11.2 per 1,000 in 2017 to 11.4 in 2019, before falling back to 11.1 in 2020 and then rising again to 11.6 in 2021. (The CDC’s figures for those years exclude data from California, D.C., Maryland, New Hampshire and New Jersey.)

The CDC broadly divides abortions into two categories: surgical abortions and medication abortions, which involve pills. Since the Food and Drug Administration first approved abortion pills in 2000, their use has increased over time as a share of abortions nationally, according to both the CDC and Guttmacher.

The majority of abortions in the U.S. now involve pills, according to both the CDC and Guttmacher. The CDC says 56% of U.S. abortions in 2021 involved pills, up from 53% in 2020 and 44% in 2019. Its figures for 2021 include the District of Columbia and 44 states that provided this data; its figures for 2020 include D.C. and 44 states (though not all of the same states as in 2021), and its figures for 2019 include D.C. and 45 states.

Guttmacher, which measures this every three years, says 53% of U.S. abortions involved pills in 2020, up from 39% in 2017.

Two pills commonly used together for medication abortions are mifepristone, which, taken first, blocks hormones that support a pregnancy, and misoprostol, which then causes the uterus to empty. According to the FDA, medication abortions are safe until 10 weeks into pregnancy.

Surgical abortions conducted during the first trimester of pregnancy typically use a suction process, while the relatively few surgical abortions that occur during the second trimester of a pregnancy typically use a process called dilation and evacuation, according to the UCLA School of Medicine.

In 2020, there were 1,603 facilities in the U.S. that provided abortions, according to Guttmacher . This included 807 clinics, 530 hospitals and 266 physicians’ offices.

A horizontal stacked bar chart showing the total number of abortion providers down since 1982.

While clinics make up half of the facilities that provide abortions, they are the sites where the vast majority (96%) of abortions are administered, either through procedures or the distribution of pills, according to Guttmacher’s 2020 data. (This includes 54% of abortions that are administered at specialized abortion clinics and 43% at nonspecialized clinics.) Hospitals made up 33% of the facilities that provided abortions in 2020 but accounted for only 3% of abortions that year, while just 1% of abortions were conducted by physicians’ offices.

Looking just at clinics – that is, the total number of specialized abortion clinics and nonspecialized clinics in the U.S. – Guttmacher found the total virtually unchanged between 2017 (808 clinics) and 2020 (807 clinics). However, there were regional differences. In the Midwest, the number of clinics that provide abortions increased by 11% during those years, and in the West by 6%. The number of clinics decreased during those years by 9% in the Northeast and 3% in the South.

The total number of abortion providers has declined dramatically since the 1980s. In 1982, according to Guttmacher, there were 2,908 facilities providing abortions in the U.S., including 789 clinics, 1,405 hospitals and 714 physicians’ offices.

The CDC does not track the number of abortion providers.

In the District of Columbia and the 46 states that provided abortion and residency information to the CDC in 2021, 10.9% of all abortions were performed on women known to live outside the state where the abortion occurred – slightly higher than the percentage in 2020 (9.7%). That year, D.C. and 46 states (though not the same ones as in 2021) reported abortion and residency data. (The total number of abortions used in these calculations included figures for women with both known and unknown residential status.)

The share of reported abortions performed on women outside their state of residence was much higher before the 1973 Roe decision that stopped states from banning abortion. In 1972, 41% of all abortions in D.C. and the 20 states that provided this information to the CDC that year were performed on women outside their state of residence. In 1973, the corresponding figure was 21% in the District of Columbia and the 41 states that provided this information, and in 1974 it was 11% in D.C. and the 43 states that provided data.

In the District of Columbia and the 46 states that reported age data to the CDC in 2021, the majority of women who had abortions (57%) were in their 20s, while about three-in-ten (31%) were in their 30s. Teens ages 13 to 19 accounted for 8% of those who had abortions, while women ages 40 to 44 accounted for about 4%.

The vast majority of women who had abortions in 2021 were unmarried (87%), while married women accounted for 13%, according to the CDC , which had data on this from 37 states.

A pie chart showing that, in 2021, majority of abortions were for women who had never had one before.

In the District of Columbia, New York City (but not the rest of New York) and the 31 states that reported racial and ethnic data on abortion to the CDC , 42% of all women who had abortions in 2021 were non-Hispanic Black, while 30% were non-Hispanic White, 22% were Hispanic and 6% were of other races.

Looking at abortion rates among those ages 15 to 44, there were 28.6 abortions per 1,000 non-Hispanic Black women in 2021; 12.3 abortions per 1,000 Hispanic women; 6.4 abortions per 1,000 non-Hispanic White women; and 9.2 abortions per 1,000 women of other races, the CDC reported from those same 31 states, D.C. and New York City.

For 57% of U.S. women who had induced abortions in 2021, it was the first time they had ever had one, according to the CDC. For nearly a quarter (24%), it was their second abortion. For 11% of women who had an abortion that year, it was their third, and for 8% it was their fourth or more. These CDC figures include data from 41 states and New York City, but not the rest of New York.

A bar chart showing that most U.S. abortions in 2021 were for women who had previously given birth.

Nearly four-in-ten women who had abortions in 2021 (39%) had no previous live births at the time they had an abortion, according to the CDC . Almost a quarter (24%) of women who had abortions in 2021 had one previous live birth, 20% had two previous live births, 10% had three, and 7% had four or more previous live births. These CDC figures include data from 41 states and New York City, but not the rest of New York.

The vast majority of abortions occur during the first trimester of a pregnancy. In 2021, 93% of abortions occurred during the first trimester – that is, at or before 13 weeks of gestation, according to the CDC . An additional 6% occurred between 14 and 20 weeks of pregnancy, and about 1% were performed at 21 weeks or more of gestation. These CDC figures include data from 40 states and New York City, but not the rest of New York.

About 2% of all abortions in the U.S. involve some type of complication for the woman , according to an article in StatPearls, an online health care resource. “Most complications are considered minor such as pain, bleeding, infection and post-anesthesia complications,” according to the article.

The CDC calculates case-fatality rates for women from induced abortions – that is, how many women die from abortion-related complications, for every 100,000 legal abortions that occur in the U.S . The rate was lowest during the most recent period examined by the agency (2013 to 2020), when there were 0.45 deaths to women per 100,000 legal induced abortions. The case-fatality rate reported by the CDC was highest during the first period examined by the agency (1973 to 1977), when it was 2.09 deaths to women per 100,000 legal induced abortions. During the five-year periods in between, the figure ranged from 0.52 (from 1993 to 1997) to 0.78 (from 1978 to 1982).

The CDC calculates death rates by five-year and seven-year periods because of year-to-year fluctuation in the numbers and due to the relatively low number of women who die from legal induced abortions.

In 2020, the last year for which the CDC has information , six women in the U.S. died due to complications from induced abortions. Four women died in this way in 2019, two in 2018, and three in 2017. (These deaths all followed legal abortions.) Since 1990, the annual number of deaths among women due to legal induced abortion has ranged from two to 12.

The annual number of reported deaths from induced abortions (legal and illegal) tended to be higher in the 1980s, when it ranged from nine to 16, and from 1972 to 1979, when it ranged from 13 to 63. One driver of the decline was the drop in deaths from illegal abortions. There were 39 deaths from illegal abortions in 1972, the last full year before Roe v. Wade. The total fell to 19 in 1973 and to single digits or zero every year after that. (The number of deaths from legal abortions has also declined since then, though with some slight variation over time.)

The number of deaths from induced abortions was considerably higher in the 1960s than afterward. For instance, there were 119 deaths from induced abortions in 1963 and 99 in 1965 , according to reports by the then-U.S. Department of Health, Education and Welfare, a precursor to the Department of Health and Human Services. The CDC is a division of Health and Human Services.

Note: This is an update of a post originally published May 27, 2022, and first updated June 24, 2022.

Support for legal abortion is widespread in many countries, especially in Europe

Nearly a year after roe’s demise, americans’ views of abortion access increasingly vary by where they live, by more than two-to-one, americans say medication abortion should be legal in their state, most latinos say democrats care about them and work hard for their vote, far fewer say so of gop, positive views of supreme court decline sharply following abortion ruling, most popular.

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Essay: Break Even Analysis
Break Even Analysis. The break-even point (BEP) is the point at which the cost of producing a product or providing a service exactly matches the revenue gained from selling that product or service. For example, if a firm's total annual costs are £1m and in the same year it generates £1m of revenue, then the firm is said to have broken-even ...
Break-Even Analysis: How to Calculate the Break-Even Point
The break-even analysis is important to business owners and managers in determining how many units (or revenues) are needed to cover fixed and variable expenses of the business. Therefore, the concept of break-even point is as follows: Profit when Revenue > Total Variable Cost + Total Fixed Cost. Break-even point when Revenue = Total Variable ...
Break-Even Analysis: Formula and Calculation
Break-even analysis entails the calculation and examination of the margin of safety for an entity based on the revenues collected and associated costs. Analyzing different price levels relating to ...
Break-Even Analysis Explained
Limitations of Break-even Analysis. The Break-even analysis focuses mostly on the supply-side (i.e., costs only) analysis. It doesn't tell us what sales are actually likely to be for the product at various prices. It assumes that fixed costs are constant. However, an increase in the scale of production is likely to lead to an increase in fixed ...
A Quick Guide to Breakeven Analysis
Take breakeven analysis. You've probably heard of it. Maybe even used the term before, or said: "At what point do we break even?". But because you may not entirely understand the math ...
Breakeven Analysis—Fixed Cost, Variable Cost, & Profit
A breakeven analysis allows you to apply various scenarios to your breakeven point and possibly increase profits. Some reasons to calculate the analysis include: Increasing the selling price : Staying with the example of $12 widgets, increasing the selling price by $1 reduces the number of units you need to sell by 1,000 based on a new ...
Break-Even Analysis: What, Why, and How
Break-even analysis, one of the most popular business tools, is used by companies to determine the level of profitability. It provides companies with targets to cover costs and make a profit. It is a comprehensive guide to help set targets in terms of units or revenue. In this article, we look at 1) break-even analysis and how it works, 2) application and benefits, and 3) calculations ...
What Is Break-Even Analysis and How to Calculate It for Your Business
A break-even analysis reveals when your investment is returned dollar for dollar, no more and no less, so that you have neither gained nor lost money on the venture. A break-even analysis is a financial calculation used to determine a company's break-even point (BEP). In general, lower fixed costs lead to a lower break-even point. A business ...
Management Accounting: Break-Even Analysis
The fixed break-even level of output = Average Annual fixed cost/Average per unit sales price - Average price per unit variable cost. £25,000 p.a/Selling price - Variable cost. £25,000/14-10* 2500/ 4= 6250. The margin of safety is a measure that is used to indicate percentage or the amount of cost by which the planned sales exceed the ...
Break Even Analysis
Break even analysis is a calculation of the quantity sold which generates enough revenues to equal expenses. In securities trading, the meaning of break even analysis is the point at which gains are equal to losses. Another definition of break even analysis is the examination and calculation of the margin of safety that's based on a company ...
The Break Even Analysis Concept in Business Essay
Breakeven analysis is a procedure used by business owners, auditors, accountants, and management staff. It depends on sorting and classifying costs that change when the production yield varies and costs not straightforwardly identified with the volume of generation production (Choudhary, Patnaik, Singh, & Kaushal, 2013).
Breakeven analysis
The breakeven point is the time at which the fixed and variable costs involved in the production and distribution of a product are matched by its overall sales: the point at which total costs are exactly equal to revenues. Beyond this point, when revenues exceed total costs, there lies profitability. To understand the breakeven analysis it is ...
Break-Even Analysis: Introduction, Assumptions and Limitations
In this article we will discuss about:- 1. Introduction to Break-Even Analysis 2. Assumptions of Break-Even Analysis 3. Limitations. Introduction to Break-Even Analysis: Break-even analysis is of vital importance in determining the practical application of cost functions. It is a function of three factors, i.e., sales volume, cost and profit. It aims at classifying the dynamic relationship ...
Break-even Analysis
Break-even analysis is concerned with predicting costs, volume and profit as the level of activity changes. The theory of break-even analysis is derived from the principles of marginal costing, and the assumptions and definitions of fixed and variable costs and their behaviours discussed in earlier chapters are used.
The Importance of understanding break even analysis
This analysis is used as a general guideline for business decision making and is important for a number of reasons, including the ability to forecast the future cost and revenues and determine whether the business is making profit or loss, and also be able to develop a pricing strategy. The break-even analysis is based on marginal costing. 2008.
Disadvantages and Advantages of Break-Even Analysis
Advantages and Uses. Break-even analysis enables a business organization to: Measure profit and losses at different levels of production and sales. Predict the effect of changes in sales prices. Analyze the relationship between fixed and variable costs. Predict the effect of cost and efficiency changes on profitability.
What is Break-Even Analysis: Importance
A break-even analysis is an economic tool that is used to determine the cost structure of a company or the number of units that need to be sold to cover the cost. Break-even is a circumstance where a company neither makes a profit nor loss but recovers all the money spent. The break-even analysis is used to examine the relation between the ...
What Is a Break-Even Analysis and Why Is It Important?
How to Use Break-Even Calculations. A break-even analysis helps to manage other aspects of your business. For example, it can: Set budgets: Determine the effects of changes in fixed and variable costs. Motivate sales staff: With break-even as the original target, sales employees can see the results of extra sales on profits and the potential ...
The Importance of Break-Even Analysis in Business Decision Making
The break-even point, defined as the juncture where total costs (expenses) align with total sales (revenue), serves as the linchpin for cost, volume, and profit analysis. Break-even analysis unfurls an array of benefits that transcend the conventional scope of business understanding.
Essay on Break-Even Analysis (BEA)
Essay # 1. Meaning of Break-Even Analysis : The break-even analysis (BEA) indicates at what level total costs and total revenue are in equilibrium. It is an analytical technique that is used to identify the level of output and sales volume at which the firm 'breaks- even', i.e. the revenues are sufficient to cover all costs. ...
Essay on Break Even Analysis
Essay # 5. Limitations of Break-Even Analysis: 1. Since Break Even Analysis is based on accounting data therefore, it can be sound and useful only if the firm in question maintains a good accounting system. 2. It is based on the assumptions of given relationships between costs and revenues, on one hand, and input on the other. 3.
Break even analysis essay (400 Words)
CASE STUDY. Break even analysis which is cost -volume-profit analysis is used to plan and assist in decision making by clarifying the effect of changes in volume and business profitability. In calculating breakeven fixed cost and contribution by unity is calculated; Contribution per unit= sales price - variable costs.
Opinion
The film, written and directed by Alex Garland, presents a scenario in which the government is at war with breakaway states and the president has been, in the eyes of part of the country ...
What the data says about abortion in the U.S.
The CDC says that in 2021, there were 11.6 abortions in the U.S. per 1,000 women ages 15 to 44. (That figure excludes data from California, the District of Columbia, Maryland, New Hampshire and New Jersey.) Like Guttmacher's data, the CDC's figures also suggest a general decline in the abortion rate over time.

Essay: Break Even Analysis – Profit, Revenue and Costs

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Break-Even Analysis Explained - Full Guide With Examples

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What Is Break-Even Analysis and How to Calculate It for Your Business?

What Is Break-Even Analysis?

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