Break-even Point

What Does 'Break-even Point' Mean?

It is the equalization point where the realized sales revenues cover the incurred costs. Break-even analysis, or BEP break-even analysis one of tools to study the relationship among changes in production and changes in costs and their impact on bottom line. The break-even point is reached when the return on sales is zero, i.e. the organization makes neither profit nor loss. We distinguish:

- Quantitative break-even point - the number of products sold at which sales revenues are equal to costs incurred for their production,
- Value break-even point - such a level of sales revenues that will cover all production costs.

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See also: Glossary [ B ]