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Dominos Break Even Analysis

The document discusses the cost of production for Domino's pizza. It provides a table showing how total costs, including fixed costs and variable costs, change as the number of labor units increases from 0 to 6. The break-even point where total costs equal total revenue is reached when there are 4 labor units. The document concludes that every business aims to at least break even, which is the point where revenues and expenses are equal.

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540 views

Dominos Break Even Analysis

The document discusses the cost of production for Domino's pizza. It provides a table showing how total costs, including fixed costs and variable costs, change as the number of labor units increases from 0 to 6. The break-even point where total costs equal total revenue is reached when there are 4 labor units. The document concludes that every business aims to at least break even, which is the point where revenues and expenses are equal.

Uploaded by

kipovo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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NIVETHA N

20BCC0142
COST OF PRODUCTION:
Product costs refer to the costs incurred by a business from manufacturing a
product or providing a service. Production costs can include a variety of
expenses, such as labour, raw materials, consumable manufacturing supplies,
and general overhead. Product costs may also include those incurred as part of
the delivery of a service to a customer. Taxes levied by the government or
royalties owed by natural resource-extraction companies also are treated as
production costs. Product costs may also include those incurred as part of the
delivery of a service to a customer.

DOMINOS COST OF PRODUCTION:

TOTAL TOTAL AVERAGE


UNIT OF TOTAL TOTAL MARGINAL TOTAL
FIXED VARIABLE
LABOUR PRODUCT COST COST COST REVENUE
COST COST

0 0 80 0 80 - - -

1 6 80 13 93 15.5 13
59
2 12 80 20 100 8.333 7 106

3 18 80 34 114 6.33 14 118

4 24 80 47 127 5.291 13 127

5 30 80 52 132 4.4 5 159

6 36 80 61 141 3.916 9 185

In this given circumstance, when there is no unit of labour the


production is zero. With the availability of modern machines
companies can produce pizzas. When the unit of labour is 6 their total
revenue is 185.
BREAK-EVEN ANALYSIS
A break-even analysis is a financial tool which helps a company to
determine the stage at which the company, or a new service or a
product, will be profitable. In other words, it is a financial calculation
for determining the number of products or services a company should
sell or provide to cover its costs (particularly fixed costs). Break-even is
a situation where an organisation is neither making money nor losing
money, but all the costs have been covered.

DOMINOS BREAK-EVEN ANALYSIS:

TOTAL TOTAL AVERAGE


UNIT OF TOTAL TOTAL MARGINAL TOTAL
FIXED VARIABLE
LABOUR PRODUCT COST COST REVENUE
COST COST COST

0 0 80 0 80 - - -

1 6 80 13 93 15.5 13
59
2 12 80 20 100 8.333 106
7
3 18 80 34 114 6.333 118
14
4 24 80 47 127 5.291 127
13
5 30 80 52 132 4.4 159
5
6 36 80 61 141 3.916 9 185

CONCLUSION:
Every business function to earn profits. If it is unable to earn a profit, it aims to
break-even. BEP is a point where revenues and expenses of a business are
equal, and it is the next best position of a company which is not earning profits.
It is the minimum point, below which the company will start incurring losses, so
the management of the company strives towards working. According to this
given circumstance the break even came when there were 4 unit of labour the
total cost is equal to total revenue.

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