ECONOMICS

Detailed explanation-1: -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-2: -A contribution margin allows you to determine the profit you generate from each individual product your business sells. The break-even point is the amount of revenue your business must generate to cover its costs and expenses. At the break-even point, your business has no profits or losses.

Detailed explanation-3: -When sales volume or sales revenue is exactly equal to total expenses, and there is no profit or loss.-At the breakeven point, the total contribution margin equals total fixed expenses.

Detailed explanation-4: -As illustrated in the graph above, the point at which total fixed and variable costs are equal to total revenues is known as the break even point. At the break even point, a business does not make a profit or loss. Therefore, the break even point is often referred to as the “no-profit” or “no-loss point.”

Detailed explanation-5: -In corporate accounting, the breakeven point (BEP) formula is determined by dividing the total fixed costs associated with production by the revenue per individual unit minus the variable costs per unit. In this case, fixed costs refer to those that do not change depending upon the number of units sold.