**Break-even point** The point at which total of fixed and variable costs of a business becomes equal to its total revenue is known as break-even point (BEP). At this point, a business neither earns any profit nor suffers any loss. Break-even point is therefore also known as no-profit, no-loss point or zero profit point. Calculation of break-even point is important for every business because it tells business owners and managers how much sales are needed to cover all fixed as well as variable expenses of the business or the sales volume after which the business will start generating profit. The computation of sales volume required to break-even is known as break-even analysis. **Break-even chart** These are graphs which show how costs and revenues of a business change with a change in sales. They show the level of sales the business must make in order to break even.
Dear Friend > Break Even Point (BEP) and Break-even chart Break Even Point (BEP) The Break – Even Point is the point or a business situation at which there is neither a profit nor a loss to the firm. In other words, at this point, the total contribution equals fixed costs. Break-even chart The break-even chart is a graphical representation of cost-volume profit relationship. It depicts the following: 1. Profitability of the firm at different levels of output. 2. Break-even point – No profit no loss situation. 3. Angle of Incidence: This is the angle at which the total sales line cuts the total cost line. It is shows as angle Θ (theta). If the angle is large, the firm is said to make profits at a high rate and vice versa. 4. Relationship between variable cost, fixed expenses and the contribution. 5. Margin of safety representing the difference between the total sales and the sales at breakeven point. Thanks