## Examples - break-even analysis (1)

Now you can get down to some practice and make sure that you know, understand and can do break-even questions. There is a strong chance that you will be faced with one in your Business and Management examination.

You are now given cost and revenue information corresponding to a particular level of sales and production. Again, the key is to decide which costs are fixed and which are variable.

### Garden Furniture plc

The Finance Manager for Garden Furniture plc has presented the Directors with the following data relating to the manufacturer of garden tables:

At the present sales and production level of 10,000 tables per quarter,

The firm has the following financial data for the previous quarter:

- Sales revenue of $1,000,000
- materials costs of $200,000
- labour costs of $100,000
- variable overheads of $100,000 and
- fixed costs of $300,000.

**Task 1:** Draw the break-even chart for the present operation. Fully label your diagram.**Task 2:** Determine how much profit the firm would make if sales fell by 10%

When you have calculated the answer and drawn the break-even chart, follow the links below to see the calculations and the correct break-even chart. If you run into difficulties, have a look at the calculations and then try to draw the chart from them.