Breakeven Point

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in AAT member discussion
Hi<BR><BR>I need to find out when a company 'broke even' in their last financial year.<BR>Any ideas? <BR><BR>I know that breakeven occurs where sufficient units of contribution cover variable + fixed costs.<BR><BR>But how do I get these figures - do I need to go through every invoice to get the fixed costs and direct costs etc.??<BR><BR>Please help. Thanks.<BR><BR>Leanne<BR>

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  • System
    System Posts: 100,537 🤖 Admin 🤖
    Breakeven Point

    Hi Leanne. Contribution is selling price less variable costs, so they have been accounted for already. To find breakeven point you take fixed costs and divide by contribution. These costs should be recorded in the accounts.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Breakeven Point

    Hi Karen,<BR><BR>I'm guessing this is a real life situation and not based on a set AAT question.<BR><BR>With this in mind, especially if the person asking the question is not an accountant then he/she may be looking for a more basic breakeven point outside of contribution/break-even theory.<BR><BR>If you keep management accounts they may simply be looking to see in which month Gross profit exceed total expenses to date?<BR><BR>It might be worth enquiring as to what exactly they are looking for.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Breakeven Point

    Great, thank you both.<BR><BR>It is a real life situation so the GP exceeding the exps to date seems the best option as we do keep management accounts.<BR><BR>Thanks again

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