Profit and Loss

• What is the break-even point (BEP)?

  The point where revenue equals total costs
• How is profit represented on a break-even graph?

  As the area above the break-even point
• What happens to the area of profit if the BEP is reduced?

  The area of profit would increase
• How is loss represented on a break-even graph?

  As the area below the break-even point
• What does a large area of loss indicate on a break-even graph?

  A high level of sales is required to break even
• What are the key components of a break-even analysis?

  • Break-even point (BEP)
  • Revenue line
  • Total cost line
  • Area of profit
  • Area of loss
• What is the significance of the break-even graph in business?

  • Visual representation of profit and loss
  • Helps in decision-making for pricing and costs
  • Identifies sales targets for profitability