Break-Even, and What Happens Either Side of It BREAKEVEN
A business with operating leverage of four turns a ten per cent fall in volume into a forty per cent fall in profit. Almost nobody’s intuition expects that.
What it costs to open the doors
Fixed costs are the ones that do not move with volume: rent, salaries, insurance, the accountant. If a cost goes up when you sell one more, it belongs in the cost of making that one, not here.
What you sell
ProductPriceCost to makeMixSelling now
Mix is the ratio they sell in — six of one for every three of another. Break-even is found for that bundle, which is why the answer moves when the mix does.
Where the line is
Which lever is worth pulling
How much you can discount
The working
Questions people ask about BREAKEVEN