THE REALITIES ABOUT POULTRY The Modern Farm - The Realities About Poultry_Seco | Page 159

(o) Break-even revenue: The sales revenue earned that would give no profit and no loss.
−
=
(p) Margin of Safety (Units): Margin of safety measures the sensitivity of the budgeted sales
volume compared with the break-even sales volume. Margin of Safety (Units) = Budgeted
sales volume less break-even sales volume.
(q) Margin of Safety (%) =
x100
Break-Even Chart
A break-even chart is a visual representation of a business’s revenue and costs at different levels of
output. This is useful, as diagrammatic representation makes it easier for non-mathematical people
to understand what is going on. A break-even chart displays the following details:
Ω Fixed costs – shown as a horizontal line
Ω Total costs (fixed + variable costs) – shown as a straight line sloping upwards from the start of
the fixed costs line.
Ω
Revenue (sales) – an upward sloping line starting from the origin (indicated by 0 (zero) of the
graph where no output results in no revenue.
Graphical expression of the break-even chart
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