This document provides an overview of break even analysis. It defines break even point as the point where total revenue equals total costs, meaning no profit or loss. It explains the components of break even analysis including fixed costs, variable costs, contribution, and profit volume ratio. The document also lists the key assumptions of break even analysis, such as fixed costs remaining constant, variable costs changing proportionally with production, price remaining constant, all production being sold, and production and sales remaining unchanged.

1. Gandhinagar Institute of
Technology
Topic : “Break Even Analysis”.
EEM ( 2130004 )
Active Learning Assignment
Prepared by : Jaimin Darji (150120116013)
GUDED BY: - Prof. Prashant R. Pandya
Branch : IT
Division : A(A1)

2. Index
What is Break Even Analysis?
Break Even Chart
Assumption of Break Even Analysis.

3. What is Break Even Analysis?
The breakeven point for a product is the point where
total revenue received equals the sale of the product.
Break Even Analysis can also be used to analyze the
potential profitability of an expenditure in a sales
based business.
In position of production where neither a profit is
made nor a loss is incurred is called Break Even
Point(BEP).
In simple words, break even point is a point at which
no profit and no loss are incurred.

4. (Sales)Total
Angle of Revenue
Incidence
Total Costs
R Break Even PROFIT
u Point Variable
p Margin of Costs
p Safety
e
e LOSS Fixed
s Costs
Units of output or Percentage of Capacity

5. Fixed Cost: Fixed Cost is the cost which does not
change with changes in output.
Variable Cost: Variable Cost is the cost which
changes with changes in output.
Profit Volume Ratio (P V Ratio):
 P V Ratio established relationship between the contribution
and sales. This ratio is a guide in determining profitability of
business. This ratio is nothing but the contribution per rupee
of sales. As fixed cost remains constant in short term period;
the P V Ratio measures the rate of change of profit due to
change in volume of sales.

6. Assumption of Break Even Analysis:
1. Total cost should be separated in to fixed & variable
cost.
2. Fixed cost will be remain fixed at all levels of
production.
3. Variable cost varies in direct proportion to the volume of
the production.
4. The selling price does not change with the change in
the quantity of sale.
5. Whatever produced is sold.
6. Production and sales will be unchanged.
7. The concern is engaged in producing only one
product.

7. Thank You!!!