ABSTRACT
Most employees never have to analyze the effect that increases or decreases in goods or services sold or produced have on the bottom line. As a manager, however, you will likely be involved in a breakeven analysis of current or proposed business. The purpose of the analysis is to be able to price goods or services at a level that will include all the fixed and variable costs. The point at which enough goods or services have been sold to cover this cost is the breakeven point. From this point on, a profit is achieved for each unit sold minus its variable cost. A breakeven analysis looks at the interaction between fixed costs, variable costs, prices, and unit volume.
