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Break even analysis Made easy

Follow my simple instructions, and you’ll be right. Break even analysis Made easy. Label the x axis output, and the y money. The fixed cost is always a horizontal line. Multiply your ‘handy’ number by the variable cost per unit, and plot that point.

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Break even analysis Made easy

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  1. Follow my simple instructions, and you’ll be right Break even analysis Made easy

  2. Label the x axis output, and the y money

  3. The fixed cost is always a horizontal line

  4. Multiply your ‘handy’ number by the variable cost per unit, and plot that point.

  5. Using your plotted point, join it up with the origin, and extend it if necessary

  6. Draw a line parallel to the Variable cost line, that starts where the FC line does

  7. Again, find a handy number, and this time multiply it by the price. Plot this point, and join it up with the origin

  8. Where the revenue and total cost lines cross is the break even point. Break even point Break even quantity

  9. Profit is the VERTICLE distance between the revenue and TC lines profit

  10. Margin of safety is the difference between current output, and the break even point. Break even point Current output Margin of safety

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