Sample Essay
The breakeven point is the point where a company or a business is operating neither in profit nor in loss. Basically in order to achieve a break even state the company has to sell enough items to cover its fixed costs after deducting the variable cost from the price sold at. The resultant amount of sales pertains to the sales depicts the amount of sales required to take place in order to sufficiently cover expenses without making profit, i.e. breaking even.
Therefore in order to determine the breakeven load for the carrier JetBlue, all the fixed cots of the operating have to be separated from the variable costs. Then the variable costs per unit have to be deducted from the Selling price of the service per unit. Then the total fixed costs have to be divided by the result of the selling price per unit deducted by the variable cost per unit. This provides the quantity of load that the carrier will have to carry in order to breakeven.
The fixed costs, the variable costs as well as the revenue/ selling price for the company would pertain to a combination of different rates per unit. The fixed costs however would be taken in whole. For the purpose of the breakeven analysis the fixed costs for the company would pertain to the operating expenses such as electricity, landing fees, depreciation of aircraft, the wages and salaries of the staff and employees, sales and marketing, etc. Selling price would pertain to the revenue made per passenger, while the variable costs would pertain to the combines cost per flight for fuel, airline operating expense, and the aircraft utilization cost.
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