1. Cost & Management Accounting
Break-even Chart
Lecture-32
Mian Ahmad Farhan (ACA)

2. Example Break-even sales (700 x 8) 5,600 Variable cost (700 x 6) 4,200
Contribution margin 1,400
Fixed cost 1,000
Profit

3. Break-even Graph Y Sales Cost & Sales (Rs) Cost Variable cost FC X
8000
7000
6000
5000
4000
3000
2000
1000
Sales
Cost & Sales (Rs)
Cost
Variable cost FC
Contribution margin FC X
Production in units

4. Profit Volume Graph Y Profit / Loss X Units sold 1000 800 600 400 200X
200
400
Units sold
600
800
1000

5. If 100 units are sold Sales (100 x 8) 800
Less Variable cost (100 x 6)
Contribution margin
Less Fixed cost ,000
Loss

6. If 200 units are sold Sales (200 x 8) 1,600
Less Variable cost (200 x 6) 1,200
Contribution margin
Less Fixed cost ,000
Loss

7. If 200 units are sold Sales (200 x 8) 1,600
Less Variable cost (200 x 6) 1,200
Contribution margin
Less Fixed cost ,000
Loss

8. If 600 units are sold Sales (600 x 8) 4,800
Less Variable cost (600 x 6) 3,600
Contribution margin ,200
Less Fixed cost ,000
Profit

9. If 800 units are sold Sales (800 x 8) 6,400
Less Variable cost (800 x 6) 4,800
Contribution margin ,600
Less Fixed cost
Profit