Hey there! 👋 Get ready to dive into the fascinating world of break-even analysis. Let's break down the impact of price or cost changes on break-even quantity, profit, and margin of safety. We're going to make this as simple and fun as possible! 🎉

This chart helps a business understand how many units they need to sell to cover their costs. It's a great decision-making tool, and we're going to explore what happens when we change prices or costs.

• Effect: If a company increases the price of its product, the total revenue line on the break-even chart shifts up (from TR1 to TR2). This means the company will earn more money for every unit sold.
• Result: The firm will reach its break-even point at a lower level of output. Profit will be higher at every output level, and the margin of safety increases. 🚀
• Real-World Example: Apple increases the price of its iPhone by $100. As a result, Apple makes more money per iPhone sold, reaches its break-even point faster, and enjoys higher profits!