Break Even Analysis - Feb 2026

• Tourism
• Foundation Degree

Break Even Analysis

Learning Objectives

• By the end of the lesson you should be able to:
• Describe the concept of break-even analysis
• Carry out break even point calculations
• Draw a break even chart on graph paper
• Begin task four of assignment 

Have you studied break even before?

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No

How do you feel about learning break even analysis?

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You probably use break even already.....

or at least the method behind it.

Some examples are as follows

Monthly Budgeting: To ensure your income covers all expenses.

 

The break-even point is reached when total monthly income equals total expenses (rent, utilities, debt, food).

Gym Memberships/Subscriptions

Determining how many times a person must visit a gym or use a streaming service to make the monthly fee "worth it" compared to paying per visit.

Calculating the "return on investment" or break-even point for your degree 

How much higher your salary must be to recoup the cost of fees and time.

Definition of Break-Even Analysis

Break-even analysis is a calculation used to determine the point at which 

revenue received equals the costs.

Break-Even Analysis - terms 

• Fixed costs - costs that stay the same at any level of output 
• Variable costs - costs that fluctuate depending on level of output 
• Selling price - amount customer pays 
• Contribution - difference between selling price and varaible costs 
• Revenue - amount generated from sales 

Importance in Decision Making

Break-even analysis helps businesses in.....

• setting prices
• determining the impact of cost changes
• making investment decisions

Break-Even Point Calculation

Fixed costs

_____________

Selling price per unit - Variable cost per unit 

(contribution)

Example.....

A business that sells T-shirts knows that:

Its fixed costs are £400.

The selling price (per unit) is £10.

The variable costs (per unit) are £6.

So their BEP can be calculated as:

Break even point = 

Fixed costs ÷ (Selling Price - Variable costs) 

400 ÷ (10-6) 

400 ÷ 4 = 100 units 

Video - take notes on:

1. What is break even?
2. The contribution formula 
3. Why break even matters?

Practice time 

wordwall.net

Wordwall - 

Wheel - group 

Other quizzes - individually 

Practice 1 - Banquet

Complete questions 1 and 2 

How do you feel about break even analysis now?

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Practice  2- Charity Event 

 Complete questions 1 and 2

Graphical Representation

Break-even analysis can be visually represented through a graph, showing the intersection of the revenue and cost lines.

Before you can draw the table you need co ordinates 

Do this by completing the following table......

Practice drawing graph 

Draw graph for Charity Event

Ruler 

Graph paper 

Pencil 

Task 4 - Assignment 

create.kahoot.it

Kahoot quiz