Break Even Chart – Model 1

Posted Sat, 12/06/2008 - 21:31 by vasu

A concise bullet-point explanation of the Break Even Chart Model -1.

Break Even Chart Model 1 Image

Break Even Chart - Model 1

 

  • The number of units produced and sold is plotted on the X axis of the graph.
  • Costs and sales revenues are shown  on the Y axis.
  • The fixed cost line is drawn parallel to X axis. This line indicates that fixed expenses remain the same with any volume of production.
  • The variable costs for different levels of activity are plotted over the fixed cost line.
  • The variable cost line is joined to fixed cost line at zero volume of production. This line can also be regarded as the total cost line because it starts from the point where fixed cost has been incurred and variable cost is zero.
  • When sales value at various levels of output is plotted, joined then the resultant line is the sales line.
  • The sales line will cut the total cost line at a point where the total costs are equal to total revenues. This point of intersection of two lines is known as Break Even Point – the point of no profit and no loss.
  • The number of units to be produced at the break-even point is determined by drawing a perpendicular to the X axis from the point of intersection and measuring the horizontal distance from the zero point to the point at which the perpendicular is drawn. 
  • The sales value at break-even point is determined by drawing a perpendicular to the Y axis from the point of intersection and measuring the vertical distance from the zero point to the point at which the perpendicular is drawn. 
  • Loss and profit are as have been shown in the chart.  If production is less than the break-even point, the business shall be running at a loss and if the production is more than the break-even level, profit shall result.

 

Break Even Chart – Model 1 | Our website now yours! - Currenlty Java focussed.

Break Even Chart – Model 1

Posted Sat, 12/06/2008 - 21:31 by vasu

A concise bullet-point explanation of the Break Even Chart Model -1.

Break Even Chart Model 1 Image

Break Even Chart - Model 1

 

  • The number of units produced and sold is plotted on the X axis of the graph.
  • Costs and sales revenues are shown  on the Y axis.
  • The fixed cost line is drawn parallel to X axis. This line indicates that fixed expenses remain the same with any volume of production.
  • The variable costs for different levels of activity are plotted over the fixed cost line.
  • The variable cost line is joined to fixed cost line at zero volume of production. This line can also be regarded as the total cost line because it starts from the point where fixed cost has been incurred and variable cost is zero.
  • When sales value at various levels of output is plotted, joined then the resultant line is the sales line.
  • The sales line will cut the total cost line at a point where the total costs are equal to total revenues. This point of intersection of two lines is known as Break Even Point – the point of no profit and no loss.
  • The number of units to be produced at the break-even point is determined by drawing a perpendicular to the X axis from the point of intersection and measuring the horizontal distance from the zero point to the point at which the perpendicular is drawn. 
  • The sales value at break-even point is determined by drawing a perpendicular to the Y axis from the point of intersection and measuring the vertical distance from the zero point to the point at which the perpendicular is drawn. 
  • Loss and profit are as have been shown in the chart.  If production is less than the break-even point, the business shall be running at a loss and if the production is more than the break-even level, profit shall result.