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    Break Even Analysis

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    Break Even Analysis

    Uploaded by

    hammadgofoods
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    Download as pptx, pdf, or txt
    4 views9 pages

    Break Even Analysis

    Uploaded by

    hammadgofoods

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    Break-even Analysis

    Understanding Financial Performance


    06-05-2024
    Objective: To analyze the break-even point and
    understand the financial performance of Go Foods.

    Agenda:
     Overview of Break-even Analysis

     Break-even Point Calculation

     Break-even Analysis Based on Historical Data


    Overview of Break-even Analysis

     Definition: Break-even analysis is a financial calculation used to determine


    the level of sales needed to cover all costs and achieve zero profit or loss.
     Key Components:
    A. Fixed Costs
    B. Variable Costs
    C. Selling Price per Unit
    D. Contribution Margin
    Break-even Point Calculation

     Formula: Break-even Point (in units) = Fixed Costs / Contribution Margin per Unit

     Fixed Costs (Monthly Expenses):For Example If 1,900,000 Rs

     Contribution Margin per Unit: Selling Price per Unit - Variable Cost per Unit

    Selling Price in March-2024 = 166 Rs GO Food Milk 1 ltr


    Cost Price in March-2024 = 131.64 Rs GO Food Milk 1 ltr
    166 – 131.64 = 34.36 Rs

    Please Note that Variable Cost Per Unit Can be Changed for Example In April-2024 Go
    Food Milk 1 Ltr Cost Price is 142.16 Rs that was 131.64 is March-2024 and Selling
    price is the same 166 Rs
    Break-even Point (GO Food Milk 1 ltr ):
    March-2024

    Actual Break Even


     Actual Sale  Fixed Costs / Contribution Margin
    per Unit
    = 166 x 25,131 Ltrs = 4,171,746
     = 1,900,000 / 36.36 = 55,246 Ltrs
    Per Day Sale: 837 LTR

     [55,246 Ltrs should be sold to


    cover the 1,900,000 Rs Monthly
    Expenses in March-2024]
     Per Day Sale: 1841 LTRs
    Break-even Point (GO Food Milk 1 ltr ):
    April-2024

    Actual Break Even


     Actual Sale  Fixed Costs / Contribution Margin
    per Unit
    = 166 x 29,129 Ltrs = 4,835,414
     = 1,900,000 / 23.84 = 79,832 Ltrs
    = 170 x 20 Ltrs = 1700 Rs
    Total Sale = 4,837,114
     [79,832 Ltrs should be sold to
    Total Ltrs Sale= 29,149
    cover the 1,900,000 Rs Monthly
    Expenses in April-2024, Because
    Cost of goods increased]
    Product Wise Forecasting
    IF Fixed Monthly Break Even sale in
    Products If Cost Price (Rs) If Selling Price Expenses Margin Per Unit Units Sale Forecast COGS Forecast No Profit/No Loss

    GO Food Milk 1 ltr 142.16 166 1,900,000 24 79,698 13,229,866 11,329,866 -

    Fresh Milk 1ltr. 149.86 166 1,900,000 16 117,720 19,541,512 17,641,512 -

    Kulfi 29.99 40 1,900,000 10 189,810 7,592,408 5,692,408 -

    Desi Gee 900gm 1,252.22 1460 1,900,000 208 9,144 13,350,659 11,450,659 -

    Desi Ghee 450gm 679.71 730 1,900,000 50 37,781 27,580,036 25,680,036 -

    Butter 100gm 118 120 1,900,000 2 950,000 114,000,000 112,100,000 -

    Butter 200gm 229 230 1,900,000 1 1,900,000 437,000,000 435,100,000 -

    Butter 500gm 535 550 1,900,000 15 126,667 69,666,667 67,766,667 -


    Yogurt 5kg
    Bucket 600 700 1,900,000 100 19,000 13,300,000 11,400,000 -

    Yogurt 450gm 82.95 90 1,900,000 7 269,504 24,255,319 22,355,319 -


    GO Food Milk
    500 ml 71.1 85 1,900,000 14 136,691 11,618,705 9,718,705 -
    All Products Forecasting to reach Break-
    Even
    Products If Cost Price (Rs) If Selling Price Margin Per Unit Unit Sales (Variable) Sale Forecast COGS Forecast Expenses Sale- COGS- EXP = Profit
    GO Food Milk 1 ltr 142.16 166 24 45,000 7,470,000 6,397,200 1,900,000.00 36,368.00
    Fresh Milk 1ltr. 149.86 166 16 6,000 996,000 899,160
    Kulfi 29.99 40 10 50,000 2,000,000 1,499,500
    Desi Gee 900gm 1,252.22 1460 208 400 584,000 500,888
    Desi Ghee 450gm 679.71 730 50 400 292,000 271,884
    Butter 100gm 118 120 2 400 48,000 47,200
    Butter 200gm 229 230 1 400 92,000 91,600
    Butter 500gm 535 550 15 400 220,000 214,000
    Yogurt 5kg Bucket 600 700 100 1,000 700,000 600,000
    Yogurt 450gm 82.95 90 7 2,000 180,000 165,900
    GO Food Milk 500 ml 71.1 85 14 3,000 255,000 213,300
    12,837,000 10,900,632
    Conclusion

     Slide 7: Break-even Analysis Against Each Product (Month-wise)


     We considered the fixed cost of 1,900,000 per month and calculated the break-even point against each
    product. By setting the total revenue equal to the total costs, we determined the quantities of each product
    that need to be sold to achieve the break-even point. This analysis provides valuable insights into the sales
    targets required for each product to cover fixed and variable costs.

     Slide 8: Break-even Analysis Across All Products (Revenue-wise Comparison)


     Additionally, we compared the total revenue generated from selling all products with the total costs, including
    fixed and variable costs. By setting the total revenue equal to the total costs, we found the overall break-
    even point considering the revenue from all products collectively. This analysis helps in understanding the
    company's overall financial performance and the revenue contribution of each product towards achieving
    profitability.

     Cost of Goods in April 2024


     It's worth noting that the cost of goods slightly increased in April 2024 compared to March 2024. This increase
    may impact the overall cost structure and break-even point calculations. It's essential for the company to
    closely monitor cost fluctuations and adjust pricing strategies accordingly to maintain profitability.

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