Page 147 - Agri-Business Management Handbook

Total costs

Sh. Sh. Variable costs Figure 6.3: Total costs
Fixed costs
Units produced

Profit do not cover the costs. The point of
production where the business starts
Profit is the excess of sales over to make profits is called the “breakeven
costs. A business makes profits if point.” In other words an entrepreneur
its sales exceed its costs, otherwise does not make profits until he
it makes losses. When production reaches the breakeven point. This
starts, the business may make losses point is explained by use of figure 6.4
as the initial production and sales

Profit Sales
Total costs
Loss

Variable costs Break even point

Fixed costs
Units produced

Figure 6.4: Illustrating the Breakeven
Point

90 | AGRI-BUSINESS MANAGEMENT HANDBOOK