Break-even Point
Sales level at which total revenue exactly covers total costs.
What is Break-even Point?
The break-even point is the level of sales at which total revenue exactly equals total costs, so the business makes neither a profit nor a loss. It is often calculated by dividing fixed costs by the contribution margin per unit, which gives the number of units that must be sold. Knowing the break-even point helps businesses set prices, sales targets, and cost budgets.