BREAKEVEN CHARTS
STEP BY STEP
STEP ONE

Find your 4 key pieces of info
Fixed Costs
2. Selling Price
3. Variable Costs
4. Forecast Output
1.

Write these on the top of your workings page. No
matter how long winded the question is, you are
always looking for these 4 pieces of info!
STEP TWO

Find your Break-Even Point in units and €’s
using this simple formula.
FC
__________ =
SP – VC
???? units
x SP = €????

SP-VC is called contribution per unit. Don’t let this confuse you in text books or exam
questions!
STEP THREE

Find your Forecast Output both in units and €
Forecast Output x SP = €€€€
o
o
These figures will tell you have far to go on the x-axis
(units) and the y-axis (€)
When plotting, you must find multiples of the breakeven
point.
STEP FOUR

Draw your graph!
Y axis is costs and revenue €, this goes as high as
your forecast sales in €
X axis is output in units, this goes as far as your
forecast output.

They must fit in multiples of the break even point.

Join the highest and farthest point with a broken line.
STEP FIVE



Mark your breakeven point with the figures from
your formula.
Its like a multiplication square. Find you BEP in
€ and in units.
Were they meet is the BEP
Draw a dotted line from BEP to units axis.
It is marked as a bullet point
STEP SIX

Draw your fixed cost line from the € axis all the
way to the forecast output line.
STEP SEVEN


Draw your total cost line from the fixed cost line,
through the BEP and touching the forecast output
line.
Draw the total revenue line from the 0,0 point,
through the BEP and touching the forecast output
line.

Total costs from fixed cost line
STEP EIGHT
Identify margin of safety
 Label and mark it.

Margin of safety is the area between the BEP and the
forecast output line.
STEP NINE
Identify your profit at full capacity.
 Label and mark it. Label it with the name AND
figures.


To find it, you must draw a line between point of
Intersection from TR line and Y axis, and from
TC line and Y axis.
 The middle area is the Profit at Full Capacity
STEP TEN

Label EVERYTHING!
Name your chart e.g. Breakeven chart for Blah
blah blah LTD.
 Draw your key at the top e.g BEP – Breakeven
Point
 Name x and y axis
 Identify 0,0


Let’s put these steps into practice with these
figures:
Fixed costs: €200,000
 Variable Costs: €5 per unit
 Selling price: €15 per unit
 Forecast output: 30,000
