ECONOMICS

Detailed explanation-1: -If revenues minus all expenses (fixed and variable, and including cost of goods sold) equals zero, you are at the break-even point. The break-even point in dollars of revenues is equal to the total of the fixed expenses divided by the contribution margin per unit.

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: -Break Even Point Formula That said, when a company’s contribution margin (in dollar terms) is equal to its fixed costs, the company is at its break-even point. If its contribution margin exceeds its fixed costs, then the company actually starts profiting from the sale of its products/services.

Detailed explanation-4: -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.

Detailed explanation-5: -The break-even point (BEP) or break-even level represents the sales amount-in either unit (quantity) or revenue (sales) terms-that is required to cover total costs, consisting of both fixed and variable costs to the company. Total profit at the break-even point is zero.