![]() The origins of break-even point can be found in the economic concepts of “the point of indifference.” Calculating the break-even point of a company has proved to be a simple but quantitative tool for the managers. N = Fixed costs / (Price per unit - Variable costs) Price per unit * N – (Variable costs * N + Fixed costs) = 0 Total costs = Variable costs * N + Fixed costs Graphically, it is the point where the total cost and the total revenue curves meet.īreak-even point is the number of units (N) produced which make zero profit. The firm just “breaks even.” Any company which wants to make abnormal profit, desires to have a break-even point. Break-even point can be described as a point where there is no net profit or loss. In simple words, the break-even point can be defined as a point where total costs (expenses) and total sales (revenue) are equal.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |