Constructing a Break-even chart

1. The breakeven chart will have two axes:

• Horizontal axis showing the sales / output (value or
units)
• Vertical axis showing £ for sales revenues and costs

2. Draw the following lines on the chart:

• Sales line – start at the origin and end at point
signifying expected sales volume / value
• Fixed costs line – starts on the vertical axis at a
point which represents the total value of fixed
costs, and runs parallel to the horizontal axis
• Total costs line – starts where the fixed costs line
meets the vertical axis and ends at the point which
represents anticipated sales volume on the
horizontal axis and the total costs of those
anticipated sales on the vertical axis
3. The breakeven point is the intersection of the sales line
and the total costs line.
4. The distance between the breakeven point and the
expected sales, in units, indicates the margin of safety at
that level of sales