1. Lesson Objectives To know and understand what break even means. To know how to draw and label a break even chart. To understand what break even shows and how to calculate it using contribution formula. To understand how changes in price and costs affect break even.

2. What does Break Even Mean?

3. A Break Even Chart

4. Drawing Break Even Graphs The exam specifies that you must be able to draw and correctly label a break even graph! Complete “Spike’s Shirts” and “DCR Cola” to learn how to do this Discuss How would a change in price and costs affect Spike Shirts’ break even point?

5. Using a Formula to Calculate Break Even Using a graph to calculate break even is time consuming. It is easier to use a break even formula

6. The Break Even Formula (Contribution Method)

7. The Margin of Safety

8. Is Break Even Analysis Really That Useful For a Business?