BY

ABHAY KUMAR
MIBA IInd SEM
According to CIMA
 A chart which shows profit or loss at
various levels of activity, the level at which
neither profit nor loss is shown being termed
the break-even point.
 It shows the relationship between either of
total cost of sales to sales or fixed cost to the
contribution.
 It is a graphic representation of cost and
revenue data so to show their inter-
relationship at different level of activity.
 Simple break even chart
First method
Second method
 Contribution break even chart
 Profit chart
 Analytical break even chart
 Cash break even chart
 control break even chart
 First method-
On the X-axis plot the volume ofproduct
or quantity of sales
On the Y-axis plot the cost and sales
revenues
Fixed cost line parallel to the X-axis
the two line total cost line and sales line
intersect at the point where there no profit
and no loss.
Selling price per unit Rs 2.5
Variable cost per unit Rs 2.00
Total fix cost Rs 20000
Find break even point
output variable cost fixed cost total costs sale
10000 20000 20000 40000 25000
20000 40000 20000 60000 50000
30000 60000 20000 80000 75000
40000 80000 20000 100000 100000
50000 100000 20000 120000 125000
60000 120000 20000 140000 150000
 Second method
Draw the variable cost line first &
thereafter drawing the fixed cost line above
the variable cost line.
Draw the sales line
Intersection of the cost line & sale line is
the break even point.
0-60 production(in th

0-160 cost and revenues(in thousands)

 This chart helps in ascertaining the amount of
contribution at different level of activity
beside the break even point. In case of this
chart first the fixed cost is plotted parallel to
the x-axis. Contribution line is drawn from
the bottom or origin, which goes up with the
increase of output or sales.
Sales line is plotted as from point ‘ o’ but
there is no total cost line
contribution line intersect ,cost line at BEP
 Break even point can also be found out
graphically by means of the profit chart.

 Question
selling price Rs 2.50 per unit
variable cost Rs 2.00 per unit
total fixed cost Rs 20
 The break even point can also be found out
graphically by means of the profit chart.

Example;
output Total cost sales profit
units Rs Rs Rs
10 40 25 -15
20 60 50 -10
30 80 75 -05
40 100 100 00
50 120 125 05
60 140 150 10
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 Analytical break even chart is prepared to
show different elements of cost and
appropriation of profit.

 Example
 Sales 100000
 Fixed cost 20000
 Debenture interest 10000
 Pref. div. 10000
 Eq. div. 20000
 Income tax 20000
 Variable cost 20000
 Direct mat. 8000
 Direct lab. 4000
 Fact. OH 6000
 Selling & admn. OH 2000
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 This chart is prepared to show the volume at
which cash break even i,e. there will no cash
loss or cash profit. It is level of activity where
cash revenue is equal to cash cost.
 Cash inflow equal to just cash requirement

for immediate liabilities.

 Sales 10000 units
 S.P. per unit Rs. 15
 Fixed cost 5000
(including depreciation Rs. 1000)
Variable cost Rs.5 per unit
Output Variable cash fixed Total cash sales
(units) costs costs costs

200 1000 4000 5000 3000

400 2000 4000 6000 6000
600 3000 4000 7000 9000
800 4000 4000 8000 12000
1000 5000 4000 9000 15000

Cash break even point= cash fixed costs/contribution per unit

=4000/10 =400units
 Break even chart can also be used for
management control purposes by making in a
part of budgetary control system
 Control break even chart compare actual cost

with budgeted cost, actual sales with

budgeted sales, actual profit with budgeted
profit and actual break even point with
budgeted break even point
 budgeteds actuals
Output 1000 1000
Variable cost per unit Rs 6 Rs5
Fixed costs Rs2000 Rs3000
Selling price per unit RS10 RS12
 Budgets Actuals Output
variable total sales varia total sales
200 1200 3200 2000 1000 4000 2400
400 2400 4400 4000 2000 5000 4800
600 3600 5600 6000 3000 6000 7200
800 4800 6800 8000 4000 7000 9600
1000 6000 8000 10000 5000 8000 12000