Help with Break-Even Chart (Business)

AxlRose1992

I just can't grasp it. I know that once I understand it it'll be such a handy question and an easy question to get full marks.

I dont know whether it's my teacher that's explaining it badly or my complete lack of skill with numbers (probably bit of both), but can anyone explain it to me in the simpilist way possible?

jennieinthe08

1) find the BE point

fixed cost

---

(divide)
selling price - variable cost (contribution per unit)


2) find the Toal cost at full capacity

fixed cost+ variable (10euro x 5000units say)


3) find the total sales at full capacity

selling price x no. of unit

...you 'd be able to draw your chart now,
a line from fixed cost
total sales line starts from (0,0) to what the figure is
total cost line from the point from the fixed cost to whatever the figure is ..
point where both lines meet is the breakeven point,draw a line down

that one should be the same as the number you got in 1)

then mark your margin of safety n profits at full capacity if they asked ..

Hope this helps:)

AxlRose1992

Thanks. I'm going to try a few past paper questions and see how I do.

Thanks again.

Joey the lips

I still use this formula and I am 35. Its one of the best formulas ever. Bank managers are swines for throwing it at you when your looking for money.

Practice it you will never forget it.