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What Is A Break Even Graph

A break even graph shows total costs and total revenue lines that intersect at the break even point, where total costs equal total revenue. To create a break even graph, a business must first prepare a budget that forecasts income and expenses. The graph is used to determine the sales volume needed for the business to break even without a profit or loss. It also shows the margin of safety if sales exceed the break even point.

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17 views4 pages

What Is A Break Even Graph

A break even graph shows total costs and total revenue lines that intersect at the break even point, where total costs equal total revenue. To create a break even graph, a business must first prepare a budget that forecasts income and expenses. The graph is used to determine the sales volume needed for the business to break even without a profit or loss. It also shows the margin of safety if sales exceed the break even point.

Uploaded by

Rapunzelwannabe
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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What Is A Break Even Graph?

A Break Even Graph is a graph which shows total costs and total revenue and the break even point where total costs equal total revenue

What Is A Budget?
To produce a break even graph the
business needs to prepare a budget A budget is a forecast of income and expenditure over a period of time As the budget is only a forecast in reality things could be very different for example interest rates may change making borrowing more expensive

The Break Even Graph


A business needs to know
Revenue/Costs

Break Even Chart


100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 1 2 3 4 5 6

at what point it will start making a profit The break even point is the point where the business makes neither a profit or a loss, that is where the total cost line crosses the total revenue line Total Revenue= Total Costs

Sales Total Revenue Total Fixed Costs Total Costs

How Do You Use A Break Even Graph?


Break Even Chart

If sales exceed the break


even point the amount it does so is called the margin of safety The business will use the break even graph to check on sales. If they sell less than the break even point then they will know they are making a loss
Revenue/Costs

100000 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 1 2 3 4 5 6

Sales Total Revenue Total Fixed Costs Total Costs

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