# Break Even Formula

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```					                                     Calculating break even

0          20         40      60        80        100

Fixed Cost          100        100        100     100       100       100

Variable Cost       0          15         30      45        60        75

Total Cost          100        115        130     145       160       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     THE CUSTOMER
Cost/Income

200
180
160     What is the difference between a need and a wa
140
120
100
80
60
40
20
0

0      20       40     60      80        100
Quantity sold
Stage 2: Plot the fixed cost line

300
280
260
240
220
Cost/Income

200
180
160
140
120
100
80
60
40
20
0

0   20         40     60      80   100
Quantity sold

Stage 3: Include the total cost line
Stage 4: Add the sales revenue line

Break even point = 44 products

Formula:

Break even =            fixed cost         .
Selling price – variable cost

=      £100             =    £100
(£3 - £0.75)             £2.25

= 44

Stage 5: Analyse the chart

```
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Description: This is an example of break even formula. This document is useful in conducting break even formula.