The break-even point (BEP) in economics, business—and specifically cost accounting—is the .. "Cost structures of enterprises and break-even charts. Break even chart. A break even chart is a chart that shows the sales volume level at which total costs equal sales. Losses will be incurred below this point, and profits will be earned above this point. The chart plots revenue, fixed costs, and variable costs on the vertical axis, and volume on the horizontal axis. The business would be able to sell 1, less than planned before they were in danger of making a loss. A break-even chart plots the sales revenue, different costs and helps identify the break even point and margin of safety.


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How to Do a Break Even Chart in Excel (with Pictures) - wikiHow

It also is a rough indicator of the earnings impact of a marketing activity. A firm can analyze ideal output levels break even charts be knowledgeable on the amount of sales and revenue that would meet and surpass the break-even point.

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If a business doesn't break even charts this level, it often becomes difficult to continue operation. The break-even point is one of the simplest, yet least-used analytical tools.


Identifying a break-even point helps provide a dynamic view of the relationships between sales, costs, and profits. For example, expressing break-even sales as a percentage of actual sales can help managers understand when to expect to break even by linking the percent to when in the week or month this percent break even charts sales might occur.

The break-even point is a special case of Target Income Saleswhere Target Income is 0 breaking even. This is break even charts important for financial analysis.

Any sales made past the breakeven point can be considered profit after all initial costs have been paid Break-even analysis can also provide data that can be useful to the marketing department of a business as well, as it provides financial goals that break even charts business can pass on to marketers so they can try to increase sales.

Break-even analysis can also help businesses see break even charts they could re-structure or cut costs for optimum results. There are certain types of Break-Even Charts which are yet to be discussed and which are used for various purposes.

Some of them are discussed here under: Under this type of BEC, break even charts total variable costs, break even charts.

In this respect it may be mentioned that if this chart contains only the details of appropriation of profit it may be called profit-appropriations BEC.

The following illustration with help to understand the principle: From the following particulars, draw up a detailed BEC: Control Break-Even Chart proves itself a very useful method which directly helps the management in taking decisions.

It is to be remembered that the detailed information about deviations between budgeted figures and actual figures is not possible graphically. Before preparing a Cash Break-Even Chart we are to divide the amount of fixed cost into two following groups: Similarly variable costs which need break even charts payment, are plotted as usual.

Operations management

So mark on the Y axis the value of the FC. Then draw the fixed cost curve. Remember, fixed costs are the costs of producing at 'output zero'.


Figure 8 Building a break-even diagram from scratch 5 You also know that the TC at break even charts output of 16, units is: Remember to add labels to the two axes and to give the chart a title!