ECONOMICS

Detailed explanation-1: -Your break-even point is equal to your fixed costs, divided by your average selling price, minus variable costs. It is the point at which revenue is equal to costs and anything beyond that makes the business profitable.

Detailed explanation-2: -Assume a company has $1 million in fixed costs and a gross margin of 37%. Its breakeven point is $2.7 million ($1 million ÷ 0.37). In this breakeven point example, the company must generate $2.7 million in revenue to cover its fixed and variable costs. If it generates more sales, the company will have a profit.

Detailed explanation-3: -Basics of Breaking-Even In other to break-even, a company’s sales revenue must be equal to its total expenses. This means that the break-even point is the point at which sales revenues are equal to total costs.

Detailed explanation-4: -The break-even point is the point at which total revenue is equal to total cost. At this point, the profit is zero. (A particular company neither makes nor loses money at this point).