# Break-even

### Charts and Analysis

'Break-even' occurs when the total profit a business is equal to the costs they make.

For example: if a business makes £50 in a day and they have to spend £50 to get supplies, then the next day they make £60 then this is break-even.

Break-even graphs:

First, you need to draw a basic graph with an X and Y axis. On the X axis, you need write the output from the business and on the Y axis you need to write the costs and revenue (income).

Next, plot a horizontal fixed cost line, the fixed costs don't change with output. Then, plot a variable cost line. This is the total cost line. This is because the fixed cost added to the variable cost is the total cost. Fixed+Variable=Total.

To calculate the variable cost you multiply variable cost per unit times the number of units.

Break-even is when the business can finally start making more profit than cost. So, even if they have to spend £50 they have more money as profit.

This sounds complicated, but it really isn't. Break-even is when a business starts to make profit.

When McDonald's started their business, there would have been a time at the start when they had to use their own expenses and resources, like a bank loan, to buy what they needed for their business. As soon as they started making extra money that covered more than their expenses, this was the break-even point.