Break even point

Payback time. Payback time is the time that elapses from the start of the project. A, to the break-even point, F. The shorter the payback time, the more attractive is the project. 

As a general rule, there is an economic break-even point at ca 0.08 mm, which coincides with the defined difference between film and sheet. Film is made mote economically by the bubble method and sheet by the tenter-frame method. The exact thickness for break-even depends on technological improvements, which can be made in both processes, in the degree of control used in regulating them and in quaUty requirements. 

A typical break-even chart is used with production models to predict optimum production levels, break-even points, and shutdown conditions under various scenarios. These models tend to involve a reasonable amount of approximation. For example, sales revenue as a function of production level involves numerous variables and relationships that are not always weU known. Such charts, however, provide useful guides for production operations. 

Heat balance The thermal balance that occurs in a building when the heat gains equal the heat losses. Also known as balance point or break-even point. 

Sion to our assumptions about the initial purchase price and the cost of gasoline. Figure 1 shows the LCC of the hybrid and the conventional car over the ten-year period as a function of the cost of gasoline. When gas prices are approximately 3 per gallon, the two cars cost about the same. This value is referred to as the break-even point. If gas prices reach 3.75 per gallon, the approximate cost in Japan, the hybrid car is more economical. Sensitivity analysis can also be conducted for other input variables, such as initial purchase price, miles driven per year and actual fuel economy. 

This tube has a ratio of outside to inside surface of about 3.5 and is useful in exchangers when the outside coefficient is poorer than the inside tube coefficient. The fm efficiency factor, which is determined by fm shape and size, is important to final exchanger sizing. Likewise, the effect of the inside tube fouling factor is important to evaluate carefully. Economically, the outside coefficient should be about V5 or less than the inside coefficient to make the finned unit look attractive however, this break-even point varies with the market and designed-in features of the exchanger. 

The position of the break-even point serves as an indicator. If it is well to the right of the chart then the margin of safety will be poor. Conversely, a position to the right of the chart will hold out opportunities for expansion. 

In Figure 61.10 fixed costs are shown above the variable costs and the non-recovery of the fixed costs below the break-even point is more clearly demonstrated. The contribution to fixed costs is of significance in the consideration of marginal costing. 

In practice, costs do not increase smoothly or remain constant. Fixed costs frequently move in a series of steps and variable costs change unevenly. There may be several break-even points at different levels of sales and outputs (Figure 61.11). 

To calculate the break-even point for x, we need values for ... 

Pricing and output, and calculating the break-even point. 

The costings exercise also shows the output that is required to reach break-even point. The break-even point refers to the price and quantity sold that will just cover all costs. At this price and sales level, no profit is made, nor will you be losing money. Break-even is when ... 

Point D is known as the break-even point and the time to reach the break-even point is called the pay-back time. In a different context, the term break-even point is used for the percentage of plant capacity at which the income equals the cost for production. 

It will be rather obvious that models that satisfy these requirements will require the use of a computer to do the detailed work of dealing with all the molecules and the forces between them. Apart from this, there is usually a considerable amount of information that needs to go into the formulation of the problem before one can get something useful out. In this review, we will demonstrate that the break-even point has been passed convincingly by several but not all modelling approaches in recent years. To elaborate on this, we will discuss both the in- and output of these models. 

For the three pivotal points, this transformation has the same effect as Eq. (12) but with exact values and simpler handling deviations between the pivots are remarkable but without interest for the intended goal. An interesting property of Eq. (14) is that it may be adapted to any other decision point /i by simply altering the value of the exponent c. While the two extreme pivots remain unchanged, the exponent of the break-even point fz = 0.5 is found as c = log(0.5) /log(/i) ... 

Break-even point The percentage of capacity at which income equals all fixed and variable expenses at that level of operation. 

Then the market for the prodnct has to be big enongh to justify the costs of R. D and subsequent coimnercialisation necessary to bring it to market. The money spent (invested) must be regained from sales revenues in a reasonable ime just to reach break-even point. Only then can real profits be made. 

The break-even point in business is when the revenue (the money brought in) is equal to the cost (the money spent to earn the revenue). When a business gets past the break-even point, it shows a profit. To find the break-even point,... 

The Problem You decide to go into the sandal-making business. Your startup costs are 1,600, and it costs you 40 per pair of sandals to produce them. You write your total cost function as C = 1,600 + 40x, where x is the number of pairs of sandals that you produce. The price at which you sell the sandals is dependent on the number of pairs you sell, so there isn t a fixed price (you lower the price to be able to sell more). In this case, the amount of revenue you get from selling x pairs of sandals is found with R = lOOx - 0.5x2. What is the break-even point How many pairs of sandals do you have to produce and sell to start making a profit ... 

When 40 pairs of sandals are produced, the revenue and the cost are the same, so x = 40 is the break-even point. 

Making this table is helpful, but it isn t very practical. A better method is to solve the system of equations. The two equations involved are C = 1,600 + 40x and R = lOOx - 0.5x2. Replace the C and the R with y, letting the y represent the amount of money spent in the cost function and the amount of money earned in the revenue function. You want to find out when those two amounts are the same to find the break-even point. Then replace they iny = 1,600 + 40x with lOOx - 0.5X2 from the equation y = lOOx - 0.5X2. Solve for the value of x. 

The break-even point can be where you start seeing some profit to your venture. After you ve reached the point where increased sales will start making you some money, you earn profit. The amount of the profit is determined by subtracting the cost from the revenue. P = R-C. What level of sales will earn a particular amount of profit ... 

The fact that the break-even point will be reached in October 2007 exemplifies the potential success of this innovative business model (Fig. 3). 

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