Break-even

A business can work out how what volume of sales it needs to achieve to cover its costs.
This is known as the break even point.

This can be done two ways mathematically and using a breakeven chart.


1. Breakeven chart

A break-even chart plots the sales revenue, different costs and helps identify the break
even point and margin of safety.


















Cuddly Teddy Bears produce and sell a range of teddy bears and are now ready to
introduce a new bear to the range Sporty Bear

It has worked out the following costs

Fixed costs 31,000
Variable costs = 6.10 per bear
They are going to sell at 15 per bear


Draw a breakeven table calculating figures for sales of
0, 500, 1000,1500,2000,2500,3000 and 3500 bears

Draw the break even graph.



Draw up a new breakeven table and plot a new break even graph with the following
changes

Fixed costs = 29,700
Variable costs = 6.20
Price = 14.50