Accounting (AS)·Overheads · NSSCAS 5.1.2
Break-even analysis & the break-even chart
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How many bags of popcorn must Penda sell before she stops making a loss? Break-even analysis answers that question with one formula and one famous chart. In this lesson you learn to calculate the break-even point and the margin of safety, to draw the conventional break-even chart exactly the way NIED wants it, and to judge when the technique can and cannot be trusted. This is a favourite Paper 2 cost and management accounting question, so master it here.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Accounting (AS) 5.1.2):
- explain the term break-even
- calculate break-even
- prepare a conventional break-even chart showing the break-even point, the margin of safety, profit and loss
- explain the advantages and disadvantages of break-even analysis
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Miss Olivia and Mike talk through the whole topic — with the figure and working drawn live.