Complete the break-even chart below by placing the following labels in the correct position on the chart:
Fixed Costs (FC)
Total Revenue (TR)
Break-even Point (BEP)
Break-even Chart
Costs/Revenue €
100,000
Output (in units)
0
10,000
20,000 - Leaving Cert Business - Question 11 - 2015
Question 11
Complete the break-even chart below by placing the following labels in the correct position on the chart:
Fixed Costs (FC)
Total Revenue (TR)
Break-even Point (BEP)... show full transcript
Worked Solution & Example Answer:Complete the break-even chart below by placing the following labels in the correct position on the chart:
Fixed Costs (FC)
Total Revenue (TR)
Break-even Point (BEP)
Break-even Chart
Costs/Revenue €
100,000
Output (in units)
0
10,000
20,000 - Leaving Cert Business - Question 11 - 2015
Step 1
Place Fixed Costs (FC)
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Answer
The Fixed Costs (FC) should be placed on the vertical axis at the point where the Total Costs (TC) intercept the vertical axis, which is at €25,000. This line remains constant as it does not change with the level of output.
Step 2
Place Total Revenue (TR)
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Answer
The Total Revenue (TR) curve is represented by a straight line that starts from the origin (0,0) and rises with an increasing slope. It should be drawn such that it intersects the TC line at the break-even point. The correct position will reflect how revenue changes with output.
Step 3
Place Break-even Point (BEP)
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Answer
The Break-even Point (BEP) is where the Total Revenue (TR) line intersects the Total Costs (TC) line. This point indicates that the business is covering all its fixed and variable costs and is neither making a profit nor a loss.
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