Break even charts Flashcards
What is a break even chart?
the value of cost and revenue plotted onto a graph to clearly show break even point
What is step one of the break even graph?(break even point)
calculate the break even point using the formula (allows us to make sure total cost and total revenue line cross at the right point
What is step 2 of constructing a break even graph?(table)
Construct a table showing the costs and revenues at different levels of output
What things go on the chart used to create a breakeven graph?
Output
Fixed costs
Variable costs
Total costs
Sales revenue
What should you do with with output on the break even chart?
Pick three pint (+0) which contains break even point in the middle
What should you do with with fixed costs on the break even chart?
these will be the same at all level of output so a straight horizontal line
What should you do with with variable costs on the break even chart?
Multiply the unit variable cost figure by the appropriate out put figure in first column
What should you do with with total cost on the break even chart?
Add together the appropriate figure in the fixed cost and variable cost columns
What should you do with with sale revenue on the break even chart?
multiply the unit selling price by the appropriate out figure in the first column
What goes on the X and Y axis of the break even graph?
Output/sales on the horizontal X axis
Costs, revenue and profit/loss on vertical Y axis
What must you do with the values worked out in the break even chart?
Plot on and label the lines for:
Fixed cost
Total cost
Sales revenue
Where should you start plotting the line for total cost from on the break even graph?
Where the fixed cost line starts on the Y-axis
Where will the break even point be on the break even point graph?
where the sales revenue crosses and total cost line
