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How many sales does it take to break even?

A product's selling price is not all available to cover rent or other fixed costs. What remains after the variable cost of each sale determines how quickly sales contribute toward those costs in a simple model.

3–7 min

Questions you could explore

  • What changes if each additional sale contributes nothing or loses money?
  • Why does a calculated break-even quantity say nothing by itself about customer demand?

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Business

How a profitable business runs short of cash

A business can record a profitable sale before its customer pays. Bills may come due in the meantime, making the timing of cash a different question from whether trading earned a profit.

8–10 min

How a profitable business runs short of cash

Business8–10 minA business can record a profitable sale before its customer pays. Bills may come due in the meantime, making the timing of cash a different question from whether trading earned a profit.

Business

Why doesn’t a factory always reach its rated output?

A machine's maximum running speed does not tell you how many usable products leave a factory. Stoppages, changeovers, and rejected output can create a gap between a capacity claim and an actual day's production.

4–5 min

Why doesn’t a factory always reach its rated output?

Business4–5 minA machine's maximum running speed does not tell you how many usable products leave a factory. Stoppages, changeovers, and rejected output can create a gap between a capacity claim and an actual day's production.

Why does one transaction change two sides of the accounts?

Business3–5 minBuying equipment changes more than what a business owns. Paying cash or borrowing the money affects the rest of the accounts differently, while assets must still balance against liabilities and equity.

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