Question by  webguy (117)

How do you set up a break-even or cost-volume-profit analysis?

I need to prepare one for the franchise owners.


Answer by  Kurt (4579)

The basic concept is to first define the fixed costs that will be in the business. These costs will be there whether the franchise does any business or not ( rent, utilities, insurance, salaries, etc ). Next find how much you must sell ( at right profit margins ) to pay for the fixed costs. Profit will be above that.


Answer by  ringneck (394)

You will need to know your fixed and variable costs of production. Once you have this, you can see what production levels will be profitable.

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