Break-even Chart
It has been defined as a chart which shows the profitability or otherwise of an undertaking at various levels of activity and as a result indicates the point at which neither profit nor loss is made.
Break-even chart. The break-even chart is a graphical representation of break-even point. The formula for break even analysis is as follows. No doubt it is an important tool which helps to make profit planning.
Break-even chart shows the inter relationship between cost volume and profit. For a company to make zero profit its total sales must equal its total. Table-1 Break Even Chart thousand Output units Total Fixed.
The Break-Even Chart is a graphical representation between cost volume and profits. It is an important aid to profit planning. It portrays a pictorial view of the relationship between costs volume and profit.
The chart plots revenue fixed costs and variable costs on the vertical axis and volume on the horizontal axis. But they all in addition to break-even point indicate revenues costs profits or losses on different output levels. Meaning Usage Advantages Limitations and construction.
A breakeven chart is a chart that shows the sales volume level at which total costs equal sales. Fixed costs are costs that do not change with varying output eg salary rent building machinery. Sales price per unit is the selling price unit selling price per unit.
Break even Chart is a graphical representation of marginal costing. Break-Even Analysis Break-Even Point units Break-Even Point s Total Fixed Costs TFC Formulas. Break Even chart is explained with the help of the following table and diagram.
The break-even point is defined as the outputrevenue level at which a company is neither making profit nor incurring loss. Break-even chart The break-even point can be calculated by drawing a graph showing how fixed costs variable costs total costs and total revenue change with the level of output. Break even quantity Fixed costs Sales price per unit Variable cost per unit Where.
Meaning of Break Even Charts. Losses will be incurred below this point and profits will be earned above this point. Variable Cost per Unit VCU BEP units TFCSPU-VCU Sales Price per Unit SPU BEP s BEP units SPU Unit Increment x-axis Graph Data.
Preparation Method Procedure and Explanation of the Break-Even Chart. A break-even chart is a graph which plots total sales and total cost curves of a company and shows that the firms breakeven point lies where these two curves intersect. On the basis of example given above the chart has been prepared.
The break-even point indicated in the chart will be one of which the total cost line and the total sales line intersect. Break even chart may be prepared in different forms and styles. Break Even Chart is that graph which shows the extant of profit or loss to the firm at different levels of sales or production.
Usually a break-even chart is prepared in the following form diagram.
