ECONOMICS

Detailed explanation-1: -The question of interaction of sales line with cost line does not arise because the total cost line is not drawn in this method. In this method, breakeven point is that point where the contribution line cuts the fixed cost line. At this point, contribution is equal to fixed expenses and there is no profit no loss.

Detailed explanation-2: -A break-even graph shows the revenue, costs, number of products sold and BEP.

Detailed explanation-3: -As illustrated in the graph above, the point at which total fixed and variable costs are equal to total revenues is known as the break even point. At the break even point, a business does not make a profit or loss.

Detailed explanation-4: -– Total Costs (TC). The Total Costs (TC) line is drawn and labelled. Recall that even when there is no Output, Fixed Costs (FC) still have to be paid. Hence, the Total Costs (TC) line starts at the same level as Fixed Costs (FC).

Detailed explanation-5: -A breakeven chart is a chart that shows the sales volume level at which total costs equal sales. Losses will be incurred below this point, and profits will be earned above this point.