1. Break even charts
What you need to know!

2. If I make a new product will I make a profit?
It depends on how many I make
It depends on what costs I have

3. Fixed Costs I must always pay these
Not affected by how many items are made
Include:
Wages
Rates
Fuel bills (electricity, gas etc for heating and lighting etc)
Advertising
Depreciation
administration

4. Variable costs These change depending on how many items are made
Includes:
Raw materials
packaging

5. Total costs
Total costs = fixed costs + variable costs

6. Break-even point
Where a business stops losing money but isn’t quite making a profit OR
Cost of production = income from sales
Total costs = total revenue
Shown in a break-even graph

7. How to create a break-even graph 1
Use Excel to make a break-even chart
Put in the column headings
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
Total variable cost: quantity x variable cost (£)
Total fixed costs + variable cost (£)

8. How to create a break-even graph 2
Fill in the number of owls sold
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
Total variable cost: quantity x variable cost (£)
Total fixed costs + variable cost (£) 50
100
150
200
250
300
350
400

9. How to create a break-even graph 3
Owls cost £10 to buy
Fill in the Total Revenue column
Total Revenue = Number of owls sold X £10
Number of owls sold
Total Revenue: quantity x price (£)
250
2500
500
5000
750
7500
1000
10000
1250
12500
1500
15000
1750
17500
2000
20000
2250
22500
25000
Number of owls sold
Total Revenue: quantity x price (£)
=A2*10
250
=A3*10
500
=A4*10
750
=A5*10
1000
=A6*10
1250
=A7*10
1500
=A8*10
1750
=A9*10
2000
=A10*10
2250
=A11*10
2500
=A12*10

10. How to create a break-even graph 4
Add the fixed costs
These are £7500
Don’t forget ‘fill down’
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
7500
250
2500
500
5000
750
1000
10000
1250
12500
1500
15000
1750
17500
2000
20000
2250
22500
25000

11. How to create a break-even graph 5
Now to add the Variable costs
Each owl costs £3 in fabric, thread and packaging
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
Total variable cost: quantity x variable cost (£)
7500
250
2500
750
500
5000
1500
2250
1000
10000
3000
1250
12500
3750
15000
4500
1750
17500
5250
2000
20000
6000
22500
6750
25000

12. How to create a break-even graph 5
Don’t forget to use a formula which you copy!
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
Total variable cost: quantity x variable cost (£)
=A2*10
7500
=A2*3
250
=A3*10
=A3*3
500
=A4*10
=A4*3
750
=A5*10
=A5*3
1000
=A6*10
=A6*3
1250
=A7*10
=A7*3
1500
=A8*10
=A8*3
1750
=A9*10
=A9*3
2000
=A10*10
=A10*3
2250
=A11*10
=A11*3
2500
=A12*10
=A12*3

13. Last step for the table Now fill in the total costs
Total costs – fixed costs + variable costs
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
Total variable cost: quantity x variable cost (£)
Total fixed costs + variable cost (£)
7500
250
2500
750
8250
500
5000
1500
9000
2250
9750
1000
10000
3000
10500
1250
12500
3750
11250
15000
4500
12000
1750
17500
5250
12750
2000
20000
6000
13500
22500
6750
14250
25000

14. Last step for the table 2
Don’t forget to use a formula which you copy!
Number of owls sold
Total Revenue: quantity x price (£)
Fixed costs (£)
Total variable cost: quantity x variable cost (£)
Total fixed costs + variable cost (£)
=A2*10
2400
=A2*4
=C2+D2 50
=A3*10
=A3*4
=C3+D3
100
=A4*10
=A4*4
=C4+D4
150
=A5*10
=A5*4
=C5+D5
200
=A6*10
=A6*4
=C6+D6
250
=A7*10
=A7*4
=C7+D7
300
=A8*10
=A8*4
=C8+D8
350
=A9*10
=A9*4
=C9+D9
400
=A10*10
=A10*4
=C10+D10

15. Now for the graph
The graph needs to show the Total revenue, Fixed Costs and Variable Costs

16. Hints
Select non-adjacent columns in Excel by selecting the first and then holding down control while selecting the next column
Change the colours of the lines by
right click > Menu >Format data series
Remove the Background colour

17. Finishing the graph
Using the Drawing tool bar add the arrow and label for the break-even point
Break even point

18. Drawing toolbar View > Toolbars > Drawing Use the arrow tool
Use the textbox tool to add a textbox for the label
Arrow tool
Textbox tool