ECONOMICS

Detailed explanation-1: -In accounting, the breakeven point is calculated by dividing the fixed costs of production by the price per unit minus the variable costs of production. The breakeven point is the level of production at which the costs of production equal the revenues for a product.

Detailed explanation-2: -The break-even point is the point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business. In other words, you’ve reached the level of production at which the costs of production equals the revenues for a product.

Detailed explanation-3: -What is break-even analysis? Break-even analysis is a small-business accounting process for determining at what point a company, or a new product or service, will be profitable. It’s a financial calculation used to determine the number of products or services you must sell to at least cover your production costs.

Detailed explanation-4: -Your Break-even Formula For example, if your fixed expenses are $10, 000 and you sell a product for $100 that has a per-unit variable cost of $45, you would perform this calculation: 10, 000 divided by (100 minus 45). This comes to 181.81 products, which you can round up to 182 products you must sell to break even.

Detailed explanation-5: -To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin.