20.2 DETERMINATION OF BREAK-EVEN POINT
The most important step in the break-even analysis is the determination of the break-even point (BEP). BEP refers to that level of operation at which a firm makes neither profit nor loss. It refers to a zero level of profit where the revenue equals the cost.
20.2.1 Graphical Presentation
The BEP can be depicted on a graph (See Fig. 20.1). Rupees are shown on the vertical axis or y-axis and units of output on the horizontal axis or x-axis. By its very nature the fixed cost is constant, and that is why it is shown with a straight horizontal line. The variable cost is zero at the zero level of production but it changes directly with the number of units produced. That is why its curve starts from the vertex ...
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