How to construct or prepare a break-even chart.

In break-even chart, the unit of production are measured on the horizontal axis and costs and revenues on the vertical axis. Fixed costs are shown as a constant in a line parallel to the horizontal axis.

The following steps are used to construct a break-even chart:-

• Prepare a graph with the horizontal axis representing activity and vertical axis representing costs and revenues
• Draw the fixed cost line at the appropriate point on the chart
• Draw the total cost line starting from the point where the fixed cost line cut the vertical axis.
• Draw the sales revenue line starting at zero and finishing at point of maximum sales.
• Write on the completed break-even chart suitable description e.g. break-even point, profit,etc