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Accounting and finance Break-even analysis: Understanding the relationship between costs, sales, and profits
- 1. Accounting and finance Break-even analysis
- 6. Drawing a break-even chart £ Quantity Fixed costs Total costs Sales revenue Break-even output Break-even sales break- even point at the break-even point, total sales = total cost (i.e. no profit or loss is made) Angle of Incidence Loss
- 8. The margin of safety x units Break-even output margin of safety
- 13. Important formula: Contribution PVR = X 100 Sales (Or) Changes in profit PVR = X 100 Changes in Sales
- 14. Fixed Expenses BEP (Volume) = PVR (or ) Fixed Expenses BEP (Unit) = Contribution per unit
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