Break-even point analysis in a selected winery
Break-even point analysis in a selected winery

Summary/Abstract: Viticulture in Slovakia has a long tradition. The territory of the country is divided into six wine-growing regions. As of 31st of July 2021, 692 active winemakers were registered. The main goal of this paper is to analyze the break-even point of the best-selling products in a selected winery operating in the Central Slovak wine region in the period 2016-2020. This paper will compare the production of the selected company with the break-even point production. The average net profit and average selling price of a bottle of selected wines will be evaluated. Next, we will focus on the quantification of operating leverage and degree of operating leverage, which compares changes in EBIT to the increase in sales. The results show that the company was profitable by selling all four top-selling wines in the period under review because actual production exceeded production at the break-even point. Even the highest profit per bottle of wine may not automatically mean the highest total profit because it is mainly affected by the number of bottles produced and sold. The last result shows that the tremendous difference between the unit price and average variable cost means more substantial operating leverage and degree of operating leverage.

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