BREAKEVEN GRAPHIC IN CRISIS BUSINESS CONDITIONS

energy costs, soaring energy prices, and the impossibility of product placement, inventory
buildup and increase of the cost of supplies. Because of very difficult business conditions, and
the risk of losses and possible bankruptcy, it is more and more common demand for
maximum economy and rationality of spending resources, and achieving profitability. To
complete these demands, it is essentially that enterprise has access to any cost made during
the reproduction cycle, as well as to develop an adequate system for monitoring costs of the
group of products or only single product in order to implement CVP analysis and determine
the breakeven point. Implementation of these two analyses can be useful for observing critical
business points and, on the basis of analysis results, making appropriate decisions that will
allow the prosperity of the company.
Requirements such as economy and profitability of business are more difficult to achieve, and
for production companies issues like which products and how to produce are increasingly
asked and the answers have a lot of opportunities. Through the application of CVP analysis
and breakeven charts it can be reached by an optimal combination of price, cost and scale of
production so that all requirements are fulfill.
THEORETICAL APPROACH AND METHODOLOGY FOR COST – VOLUME –
PROFIT ANALYSIS AND BREAKEVEN GRAPHIC
In accordance with the processes of integration in European Union and present economic
crisis, it is necessary to devote attention to the macro and micro level of economic activities.
There is a necessity for companies to adapt to new business conditions, which are the result of
economic recession and all challenges that are brought. The new conditions require the
implementation of new models and methods of managing enterprises, and improving existing
ones. 1
Costs have central role in business policy of the company. Management of the company has
very serious task - to analyze each decision with respect to future costs which will occur as a
result of decisions made. It is necessary to consider this issue because, however much it
seemed abundantly, cost management becomes more and more important especially in the
modern business environment, characterized by uncertainty and constant presence of risk, the
economic crisis with the effects of recession, growing competition, increase in prices of basic
energy for initiation of production capacity, new regulations in the field of ecology and social
responsibility, changes in consumers preferences, etc. 2
Economic theory, particularly economics of production, defined costs in different ways.
Through all those definitions of costs it may be concluded that are refer to investments in new
products and services. Some authors have given the following interpretation of the costs:
„Costs are value expressed, operating necessary expenses of goods or services for production
of products, and in the shortest formulation: costs are, by production, driven consumable
goods“ 3 . Here it is given the most used citation of costs in production. Beside this, another
definition of costs is given by accountants and according them “costs are resources sacrificed
1 Anđelković Marija, Pešić Darko, (2005), „Breakeven Graphic’s Role in Modern Conditions of Doing Business
“ (Uloga grafikona rentabiliteta u pri donošenju odluka u savremenim uslovima poslovanja), časopis Ekonomske
teme, Vol. 13, Num. 1 – 2, pp. 80.
2 Berber, N., (2010), „Costs in function of economic efficiency of enterprise Hissar a.d. Prokuplje“ (Troškovi u
funkciji ekonomskog uspeha preduzeća Hissar a.d. iz Prokuplja), Ekonomski fakultet, Subotica, pp. 4.
3 Mellerowicz, K., (1973.), „Kosten und Kostenrechung“ I Band, Theorie der Kosten, 5. Avuflage, Berlin – New
York, pp. 6.