Calculating break even
0 Fixed Cost Variable Cost Total Cost 100 0 100 20 100 15 115 40 100 30 130 60 100 45 145 80 100 60 160 100 100 75 175
Total Sales
0
60
120
180
240
300
(Variable Cost = £0.75 per product; Total sales = £3 per product)
Stage 1: Draw and label the scales for the graph
300 280 260 240 220 200 180 160 140 120 100 80 60 40 20 0
Cost/Income
THE CUSTOMER What is the difference between a need and a wa
0
20
40 60 80 Quantity sold
100
Stage 2: Plot the fixed cost line
300 280 260 240 220 200 180 160 140 120 100 80 60 40 20 0 0 20 40 60 80 Quantity sold 100
Stage 3: Include the total cost line
Cost/Income
Stage 4: Add the sales revenue line
Break even point = 44 products Formula: Break even = fixed cost . Selling price – variable cost £100 (£3 - £0.75) = £100 £2.25
=
= 44
Stage 5: Analyse the chart