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Cost Output BEP start with 2 important axes (line). Cost and Output Sunday, December 15, 13

Break Even Charts - a simple explanation

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Break even point (BEP) is the most important data to all company. Here is the simple explanation on how to read the BEP chart. From the chart we can plan the BEP easily.

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Page 1: Break Even Charts - a simple explanation

Cost

Output

BEP start with 2 important axes (line). Cost and Output

Sunday, December 15, 13

Mohd Farid Awang
Watch the movie on BEP Charts at :http://www.youtube.com/watch?v=B_Nepzytv8c
Page 2: Break Even Charts - a simple explanation

Cost

Output

Next, is the COST line. The most important line is the

Total Fixed Cost (FC) line. You need to calculate and identify your FC. Pls be precise as u

can.

Fixed Cost

Sunday, December 15, 13

Page 3: Break Even Charts - a simple explanation

Fixed Cost

Cost

Output

FC line is a straight line. Why? because how much the output u made, the FC will

not change = increase@decrease.

Sunday, December 15, 13

Page 4: Break Even Charts - a simple explanation

Cost

Output

Sample =Output 1000units : FC RM100Output 500units : FC RM100Output 2000units : FC RM100

Fixed Cost

Sunday, December 15, 13

Page 5: Break Even Charts - a simple explanation

Cost

Output

Next is, Total Cost line. (FC + Variable Cost). The TC line will move upward because it is a

cumulative cost for every unit of output.

Fixed Cost

Sunday, December 15, 13

Page 6: Break Even Charts - a simple explanation

Cost

Output

Next is, Total Cost line. (FC + Variable Cost). The TC line will move upward because it is a

cumulative cost for every unit of output.

Fixed Cost

Total Cost

Sunday, December 15, 13

Page 7: Break Even Charts - a simple explanation

Cost

Output

As mention before, FC is static, so why Total Cost is

keeps increasing? The answer is : The Variable Cost (VC) of

each outputs is not static Total Cost

Fixed Cost

Sunday, December 15, 13

Page 8: Break Even Charts - a simple explanation

Cost

Output

Sample =Output 100units : VC RM100Output 50units : VC RM25

Output 200units : VC RM200Total

Cost

Fixed Cost

Sunday, December 15, 13

Page 9: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Now, lets see where is FC and VC located.

Sunday, December 15, 13

Page 10: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Now, lets see where is FC and VC located.

Variable Cost

Sunday, December 15, 13

Page 11: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Now, lets see where is FC and VC located.

Variable Cost

Fixed Cost

Sunday, December 15, 13

Page 12: Break Even Charts - a simple explanation

Cost

Output

Next, Lets draw Sales line. It is cumulative amount,

therefore the line will always be uptrend. Start with zero (0) value. The degree of sales

line will depend on sales Total

Cost

Fixed Cost

Sunday, December 15, 13

Page 13: Break Even Charts - a simple explanation

Cost

Output

Next, Lets draw Sales line. It is cumulative amount,

therefore the line will always be uptrend. Start with zero (0) value. The degree of sales

line will depend on sales

Sales

Total Cost

Fixed Cost

Sunday, December 15, 13

Page 14: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Sales

We can see three (3) sales conditionNow we have all the basic

Line to locate the BEP point. Then, where is BEP?

Sunday, December 15, 13

Page 15: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Sales

Sales at BEP

The POINT where Sales Line met/cross with Total Cost Line MEANS that

TOTAL SALES is Equal to TOTAL COST = NO

PROFIT is generated

We can see three (3) sales conditionNow we have all the basic

Line to locate the BEP point. Then, where is BEP?

Sunday, December 15, 13

Page 16: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Sales

Sales at BEP

Sales at PROFIT

Sales at LOSS

The POINT where Sales Line met/cross with Total Cost Line MEANS that

TOTAL SALES is Equal to TOTAL COST = NO

PROFIT is generated

Sales ABOVE Total Cost

Sales BELOW Total Cost

We can see three (3) sales condition

Sunday, December 15, 13

Page 17: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Sales

Sales at BEP

Sales at PROFIT

Sales at LOSS

The POINT where Sales Line met/cross with Total Cost Line MEANS that

TOTAL SALES is Equal to TOTAL COST = NO

PROFIT is generated

Sales ABOVE Total Cost

Sales BELOW Total Cost

Based on the above BEP charts, now u can easily see and verify either your SALEs is good or bad. I believe all businessman want to make profit not vice versa. The

minimum sales off coz will be at BEP point.Sunday, December 15, 13

Page 18: Break Even Charts - a simple explanation

Sales at BEP

Sales

Total Cost

Fixed Cost

Now, we can say that the lower BEP is the better for

the company.

Sunday, December 15, 13

Page 19: Break Even Charts - a simple explanation

Sales

Total Cost

Fixed Cost

Sales at BEP

How to lower our BEP? firstly, we can reduce our FC which will reduce the Total Cost.

Sunday, December 15, 13

Page 20: Break Even Charts - a simple explanation

Sales

Total Cost

Fixed Cost

Sales at BEP

Or we can increase the sales. Off coz its need correct strategies and approaches

Sunday, December 15, 13

Page 21: Break Even Charts - a simple explanation

Total Cost

Fixed Cost

Cost

Output

Sales

Sales at BEP

Sales at PROFIT

Sales at LOSS

The POINT where Sales Line met/cross with Total Cost Line MEANS that

TOTAL SALES is Equal to TOTAL COST = NO

PROFIT is generated

Sales ABOVE Total Cost

Sales BELOW Total Cost

Thats all from me. Tq for watching. Pls email to [email protected] for

any info

Sunday, December 15, 13

Mohd Farid Awang
Watch the movie on BEP Charts at :http://www.youtube.com/watch?v=B_Nepzytv8c
Mohd Farid Awang
Mohd Farid Awang