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Daily Concept Booster Mechanical Engineering: Break Even Analysis Part- 02

Break Even Analysis

Break-even point

The point at which there is no loss and no profit is called break-even point

Break-even quantity

The number of quantities produced at breakeven point i.e. there is no profit and no loss is called break even quantity.

Let F = fixed cost
V = Variable cost per unit
S = Sales price per unit
P = Profit
X* = Break-even quantity
X = No. of quantity produced
At break-even point
F=X* (S-V)
X*=F/(S-V)
And
F+P=X(S-V)
X=(F+P)/(S-V)

Angle of incidence (θ)

It is the angle between the total income line and the total cost line.
When the angle of incidence is increasing then the profit is being made at higher rate and vice versa.

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