Make up situation in which you could use the break even analysis. List all costs considered in the break-even analysis, and identify if the cost is variable, fixed or mixed. Be sure to include your break-even equation and calculations.

Reference: https://www.youtube.com/watch?v=tXI3Qdu_Qt8&t=2s

Example:

If I were to open a business to apply the breakeven point analysis I would open a supplement factory focusing on protein powder. In order to reach my breakpoint I would need to get the number of units I create to cover my cost of producing them. First I would need to buy a building or a plant where I can create the product and this would go under fixed costs. The fixed cost of the building would cost around $300,000 and the cost of the equipment to create the protein powder would cost around $75,000. Ideally I would like to sell my supplement around $30 a container. The variable costs would be the labor, raw materials, delivering fees, and packaging supplies. Overall, the variable costs would be around $15 to make per protein powder container. The equation would be (300,000+ 75,000) / (30-15) = 25,000. This means I would need to sell 25,000 container in order to break even in my business. Although this does seem high I think with the right target market I could reach this number in 3-5 years. In order to relieve some of the costs though I could look into getting a smaller plant and this will also help reduce utilities or my fixed costs. I can also analyze what my competitors are charging to see if I am setting my price high enough. In terms of lower variable costs I could become more efficient with labor distribution. After working in these 3 factors I hope to achieve my goals of selling 10,000 containers in the first year of business to get closer to me break even point in order to make a profit in 5 years and possibly open another factory.