Costs, Profits and Break-even Analysis Alas, this means coming to terms with numbers, something that seems to frighten a large proportion of Business Studies students. Before reaching the stage of actually drawing a break-even diagram we need to think what actually goes into one. First, we need to look at costs. They can be referred to in terms of output, time or product. When we speak of costs in terms of output and time we …showed first 75 words of 898 total…

…showed last 75 words of 898 total…must buy what are known as its FIXED ASSETS. These are the profit generating parts of the business and form the fixed costs. As such they have to be paid for regardless of output. Let's say that in our example the fixed costs are £10,000 whether we fully produce or make a complete zero amount of whatever it is we are producing. We can see in the diagram below that the fixed costs line is horizontal.