Break-even chart
A break-even chart plots revenue and total cost against activity, with fixed cost shown where appropriate. The intersection of revenue and total cost is break-even; their vertical difference represents profit or loss at a chosen volume. Axes, units and assumptions must be clear. A contribution-format chart instead highlights variable cost and contribution. Charts can communicate the model but cannot demonstrate that linear relationships continue beyond the relevant range.
Worked example
At 2,000 units, revenue and total cost are both $40,000. At 2,500 units, revenue $50,000 and total cost $47,000 leave a $3,000 profit gap.
Common mistake
Do not read the intersection of revenue and variable cost as break-even when fixed costs remain to be covered.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |
