Operations Management: Processes and Supply Chains, 12th Edition

Break-Even Analysis

To evaluate an idea for a new service or product, or to assess the performance of an existing one, determining the volume of sales at which the service or product breaks even is useful. The break-even quantity is the volume at which total revenues equal total costs. Use of this technique is known as break-even analysis. Break-even analysis can also be used to compare processes by finding the volume at which two different processes have equal total costs.

break-even quantity

The volume at which total revenues equal total costs.

break-even analysis

The use of the break-even quantity; it can be used to compare processes by finding the volume at which two different processes have equal total costs.

Evaluating Services or Products ...