ECONOMICS

Detailed explanation-1: -The variable cost is the difference between the total cost line and the fixed cost line which is not labeled and cannot be noticed in the break-even graph.

Detailed explanation-2: -The two costs involved in break-even analysis are fixed and variable costs. Variable costs change with the number of units sold while fixed costs remain somewhat constant regardless of the number of units sold. A variable cost would include inventory or raw materials involved in production.

Detailed explanation-3: -Break-even analysis depends on the following variables: Selling Price per Unit:The amount of money charged to the customer for each unit of a product or service. Total Fixed Costs: The sum of all costs required to produce the first unit of a product.

Detailed explanation-4: -Essentially breakeven is determined by two basic factors–anticipated revenue and projects costs of doing business. Revenue is largely affected by market demand. The more customers desire your products and services, the greater your sales volume and the sooner you can cover your business costs.

Detailed explanation-5: -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. Therefore, the break even point is often referred to as the “no-profit” or “no-loss point.”