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Why the break even output level with the help of illustration What do you understand by break even chart explain?
Wiki User
∙ 16y ago
Break even is basically how many units are needed to be sold to cover TOTAL FIXED COSTS.
For example, say you sell apples at $1.00 each, but it costs 50cents per unit to distribute them, you'd be making a contribution margin (CM) of 50cents (1- 0.50 = 0.5)
Now lets also consider you have $1000 in fixed costs, how many will you need to sell to cover this cost?
2000 units as (fixed costs/CM) = Break even
Wiki User
∙ 16y ago
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