Section 3 of 11
Break-even point (BEP) — where Total Revenue = Total Costs (zero profit)
BEP (units) = Fixed Costs ÷ Contribution per Unit
Three methods of finding BEP:
Break-even graph components:
Adjust the values below — the graph updates live
Break-even point
500 units
Break-even revenue
£15,000
Contribution per unit
£20
Margin of safety at max output
400 units
| Units | Fixed Costs | Variable Costs | Total Costs | Revenue | Profit / (Loss) |
|---|---|---|---|---|---|
| 0 | £10,000 | £0 | £10,000 | £0 | (£10,000) |
| 200 | £10,000 | £2,000 | £12,000 | £6,000 | (£6,000) |
| 400 | £10,000 | £4,000 | £14,000 | £12,000 | (£2,000) |
| 600 | £10,000 | £6,000 | £16,000 | £18,000 | £2,000 |
| 800 | £10,000 | £8,000 | £18,000 | £24,000 | £6,000 |
Example — Jason Sports Ltd: FC £10,000; SP £30; VC £10
Uses: new business planning, "what if" scenario testing, bank loan applications, evaluating management decisions
Limitations:
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