Break-even analysis
Break-even analysis is a way for businesses to calculate how much of a product needs to be sold to cover costs.
Watch the video for an overview of break-even:
You can read more about break-even analysis here:
We will use a sandwich shop named ‘Rholiau Rhian’ to illustrate the calculations in this section.
This is Rholiau Rhian, a small sandwich shop near a university building that mainly sells sandwiches to students.
Rhian employs one person to work with her in the shop during the week.
Rhian rents the building for the business.
She has also bought a small van with a bank loan to go to the wholesaler to buy ingredients.
She also leases a professional coffee machine.
To produce a break-even forecast, a business needs to know their total costs, total receipts, and the selling price of their goods.