【A.10.00】What is a break-even chart?
Briefing Note
Reading comprehension is a skill that empowers lifelong learning intelligence for a better self.
A break-even chart..
✅ ..a graphical representation that shows the relationship between the revenue generated by a business and its costs.
✅ ..used to determine the point at which the business will break even, which means that the total revenue earned will be equal to the total costs incurred.
✅ ..shows the point which is often referred to as the “breakeven point” or “level of sales.”
✅ ..can be used to calculate the breakeven point in terms of units sold or in terms of sales revenue generated.
The chart typically has two axes..
✅ ..the horizontal (X) axis represents the level of sales or units sold, while the vertical (Y) axis represents the total revenue and total costs.
✅ The total costs are usually divided into fixed costs and variable costs:
🚩 Fixed costs are represented by a straight horizontal line.
🚩 Variable costs are represented by a line that increases with the level of sales.
The breakeven point is where..
✅ ..the total revenue and total costs intersect on the chart.
✅ ..the business is operating at a loss.
✅ ..the business is operating at a profit.
✅ ..businesses can determine the minimum level of sales or revenue needed to cover their costs and avoid operating at a loss.
✅ ..helps businesses make more informed decisions about pricing, production levels, and sales strategies.
Here is the video for dynamic comprehension..
