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: -Break-even is the point at which revenue and total costs are the same, meaning the business is making neither a profit nor a loss.

Detailed explanation-3: -Maximum profit is the level of output where MC equals MR. Thus, the firm will not produce that unit. Profit is maxmized at the level of output where the cost of producing an additional unit of output (MC) equals the revenue that would be received from that additional unit of output (MR).

Detailed explanation-4: -Changes in revenue An increase in revenue is usually a positive thing for a business, because if revenue increases then profits are also likely to increase. Increasing revenue also allows a business to get past its break-even point (BEP) and increase its margin of safety by selling more products.

Detailed explanation-5: -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. Before we calculate the break-even point, let’s discuss how the break-even analysis formula works.