Breakeven Point Graph
Posted: Wed Feb 12, 2025 9:39 am
It is convenient to calculate the break-even point in Excel. There you can set up formulas and periodically update the data, Excel will calculate everything automatically.
Another way to determine the break-even point of an enterprise is a graphical one. It is considered more convenient and visual, so many entrepreneurs are used to working with it.
The horizontal axis shows the volume of products sold in physical terms. The vertical axis shows all business expenses in monetary terms and revenue. The graph may look like this:
There are several features of constructing such graphs. Let's consider how to visualize the breakeven point.
1) To calculate the break-even point, it is necessary to plot a line of fixed costs. It is parallel to the X-axis and is not derived from the zero coordinate.
In the picture, it is a red line that comes out of the value "1000". This means georgia phone number list that all fixed costs of the company are equal to 1000 conventional units. Therefore, if the business cannot sell a single product, the company will still bear some of the costs. This is the payment of fixed costs.
2) Next, variable costs are identified. This is a straight line that starts from the zero coordinate and goes up. In the picture, this is the orange line.
3) After this, we construct a line of total costs. This is the sum of all fixed and variable costs. The line starts from the starting point of fixed costs and moves parallel to variable costs. In our example, this is the purple line.
4) At the end, we draw a line that corresponds to the revenue for the reporting period. In our example, this is the green line, which, like variable costs, comes out of the zero coordinate.
The break-even point is the intersection of the total cost and revenue lines. Everything to the left and below the point is the company's losses. Everything to the right and above is profit. It turns out that at this very point, profit will be zero.
Another way to determine the break-even point of an enterprise is a graphical one. It is considered more convenient and visual, so many entrepreneurs are used to working with it.
The horizontal axis shows the volume of products sold in physical terms. The vertical axis shows all business expenses in monetary terms and revenue. The graph may look like this:
There are several features of constructing such graphs. Let's consider how to visualize the breakeven point.
1) To calculate the break-even point, it is necessary to plot a line of fixed costs. It is parallel to the X-axis and is not derived from the zero coordinate.
In the picture, it is a red line that comes out of the value "1000". This means georgia phone number list that all fixed costs of the company are equal to 1000 conventional units. Therefore, if the business cannot sell a single product, the company will still bear some of the costs. This is the payment of fixed costs.
2) Next, variable costs are identified. This is a straight line that starts from the zero coordinate and goes up. In the picture, this is the orange line.
3) After this, we construct a line of total costs. This is the sum of all fixed and variable costs. The line starts from the starting point of fixed costs and moves parallel to variable costs. In our example, this is the purple line.
4) At the end, we draw a line that corresponds to the revenue for the reporting period. In our example, this is the green line, which, like variable costs, comes out of the zero coordinate.
The break-even point is the intersection of the total cost and revenue lines. Everything to the left and below the point is the company's losses. Everything to the right and above is profit. It turns out that at this very point, profit will be zero.