Break Even Chart - Model 3

Posted Sat, 12/13/2008 - 17:41 by vasu

A concise bullet-point explanation of the Break Even Chart Model -3.

BreakEvenChart - Model3 Image

Break Even Chart Model -3

 

  • The fixed cost line is drawn parallel to the X axis.
  • The contribution line is drawn from the origin and this line goes up with the increase in output.
  • The sales line is plotted as usual.
  • The question of interaction of sales line with cost line does not arise because the total cost line is not drawn in this method.
  • Here, break-even point is that point where the contribution line cuts the fixed cost line. At this point, contribution is equal to fixed expenses and there is neither profit nor loss.
  • If the contribution is more than the fixed expenses, profit shall arise and if it is less than the fixed expenses, loss shall arise.

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Break Even Chart - Model 3

Posted Sat, 12/13/2008 - 17:41 by vasu

A concise bullet-point explanation of the Break Even Chart Model -3.

BreakEvenChart - Model3 Image

Break Even Chart Model -3

 

  • The fixed cost line is drawn parallel to the X axis.
  • The contribution line is drawn from the origin and this line goes up with the increase in output.
  • The sales line is plotted as usual.
  • The question of interaction of sales line with cost line does not arise because the total cost line is not drawn in this method.
  • Here, break-even point is that point where the contribution line cuts the fixed cost line. At this point, contribution is equal to fixed expenses and there is neither profit nor loss.
  • If the contribution is more than the fixed expenses, profit shall arise and if it is less than the fixed expenses, loss shall arise.