22.5. Graphical Representation: Break-even Chart

Try these first

1. 1.

   What does the X-axis represent in a break-even chart?

   Hint

   Think about what changes with the amount of product sold.

2. 2.

   What does the intersection of total cost and total revenue lines signify?

   Hint

   What does it mean for profit or loss?

3. 3.

   What does the break-even chart illustrate?

   • Relationship between cost and profit
   • Relationship between cost and quality
   • Relationship between units sold and price

   Hint

   Look for the relationship that involves profit.

4. 4.

   True or False: The total cost line always starts from zero.

   • True
   • False

   Hint

   Consider where fixed costs begin.

5. 5.

   Your company currently sells 1,000 units at ₹400 each, with fixed costs of ₹80,000 and variable costs of ₹250 per unit. If you decrease the selling price to ₹350, what will be the new break-even point?

   Hint

   Recalculate the break-even point using the new price.