What is Break Even Chart?
A Break Even Chart is a financial tool used to determine the point at which revenue equals expenses, resulting in neither profit nor loss. It helps businesses understand the minimum amount of sales needed to cover costs.
What are the types of Break Even Chart?
There are two main types of Break Even Charts: 1. Fixed Costs Break Even Chart - focuses on fixed costs such as rent, salaries, and utilities. 2. Variable Costs Break Even Chart - considers variable costs like production materials, shipping, and commissions.
How to complete Break Even Chart
To complete a Break Even Chart, follow these steps: 1. Identify fixed and variable costs. 2. Determine selling price per unit. 3. Calculate contribution margin per unit. 4. Divide fixed costs by contribution margin to find Break Even Point in units. 5. Multiply Break Even Point in units by selling price per unit to find Break Even Point in revenue.
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