Break Even Chart

Tags

finance

A graph which plots cost and total revenues against sales volume and indicates the break-even-point.

See [see page 12, eg], we plot revenue/cost on the Y-axis and number of units on the X-axis. Fixed costs is drawn as a dashed line parallel to the X-axis. Variable cost is drawn as a straight line through the origin. Total costs is the sum of these two graphs. Sales revenue is the profit per unit. The intersection of the two lines shows the break even point.

The gradient of each line is equal to the cost/profit related to them.