Breakeven charts

Contribution and Breakeven Charts These can be used to give valuable preliminary information prior to the use of the more sophisticated and time-consuming methods based on discounted cash flow. If the sales price per unit of sales is Cs and the variable expense is Cy per unit of produc tion, Eq. (9-7) can be rewritten as... 

Breakeven charts can be plotted in any of the three forms shown in Figs. 9-2, 9-3, and 9-4. The abscissa shown as annual sales volume R is also frequently plotted as a percentage of the designed production or sales capacity Rq. In the case of ships, aircraft, etc., it is then called the percentage utilization. The percentage margin of safety is defined as... 

FIG. 9-3 Breakeven chart showing fixed expense as a burden cost. 

FIG. 9-4 Breakeven chart showing relationship between contribution and fixed expense. 

Breakeven charts present a snapshot of the present situation by means of graphs which are generally drawn in the manner shown in Figs. 9-2, 9-3, and 9-4. Since the lines are straight, this implies that Cs, Cy , and Aee will remain constant over the range of variation of R, which is of interest. The values would be based on the production rate currently achieved (or scheduled), since all the data are available from... 

A chemical manufacturing company sells three products and has found that its revenue function is / = 10 + 4 Ay2 + 2z, where, y, and z are the monthly production rates of each chemical. It is found from breakeven charts that it is necessary to impose the following limits on the production rates ... 

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