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Cost Volume Profit Analysis

Breakeven charts

3.1 Basic breakeven chart

 A basic breakeven chart records costs and revenues on the vertical axis (y) and
the level of activity on the horizontal axis (x).

 Lines are drawn on the chart to represent costs and sales revenue.

 The breakeven point can be read off where the total sales revenue line cuts the
total cost line.

Illustration 1

The following data is available to draw the basic breakeven chart next page:

Selling price per unit $50 per unit

Less: variable cost per unit $30 per unit

Fixed costs $20,000 per month

Forecast sales 1,700 units per month

You will not have to draw any graph in the exam but you may be asked
to interpret data from a graph given to you as part of a question.

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