- Break-even
In

economics , specificallycost accounting , the**break-even point**(BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". Therefore has not made a profit or a loss.**Computation**In the linear

Cost-Volume-Profit Analysis model, [*Where marginal costs and marginal revenues are constant, among other assumptions.*] the break-even point (in terms of Unit Sales (X)) can be directly computed in terms of Total Revenue (TR) and Total Costs (TC) as::$egin\{align\}\; ext\{TR\}\; =\; ext\{TC\}\backslash \; ext\{P\}\; imes\; ext\{X\}\; =\; ext\{TFC\}\; +\; ext\{V\}\; imes\; ext\{X\}\backslash \; ext\{P\}\; imes\; ext\{X\}\; -\; ext\{V\}\; imes\; ext\{X\}\; =\; ext\{TFC\}\backslash left(\; ext\{P\}\; -\; ext\{V\}\; ight)\; imes\; ext\{X\}\; =\; ext\{TFC\}\backslash \; ext\{X\}\; =\; frac\{\; ext\{TFC\{\; ext\{P\}\; -\; ext\{Vend\{align\}$where:

***TFC**is**Total**,Fixed Costs

***P**is**Unit Sale Price**, and

***V**is**Unit Variable Cost**.The quantity $left(\; ext\{P\}\; -\; ext\{V\}\; ight)$ is of interest in its own right, and is called the

**Unit Contribution Margin**(C): it is the marginal profit per unit, or alternatively the portion of each sale that contributes to Fixed Costs. Thus the break-even point can be more simply computed as the point where Total Contribution = Total Fixed Cost::$egin\{align\}\; ext\{Total\; Contribution\}\; =\; ext\{Total\; Fixed\; Costs\}\backslash \; ext\{Unit\; Contribution\}\; imes\; ext\{Number\; of\; Units\}\; =\; ext\{Total\; Fixed\; Costs\}\backslash \; ext\{Number\; of\; Units\}\; =\; frac\{\; ext\{Total\; Fixed\; Costs\{\; ext\{Unit\; Contributionend\{align\}$In currency units (sales proceeds) to reach break-even, one can use the above calculation and multiply by Price, or equivalently use the Contribution Margin Ratio (Unit Contribution Margin over Price) to compute it as:$ext\{Break-even\; Point\; (in\; Sales)\}\; =\; frac\{\; ext\{Fixed\; Costs\{\; ext\{C\}/\; ext\{P.$

R=CWhere R is revenue generatedC is cost incurred i.e. Fixed costs + Variable Costsor Q X P(Price per unit)=FC + Q X VC(Price per unit)Q X P - Q X VC=FC Q (P-VC)=FCor Q=FC/P-VC=Break Even Point

**Application**The break-even point is one of the simplest yet least used analytical tools in management. It helps to provide a dynamic view of the relationships between sales, costs and profits. A better understanding of break-even—for example, expressing break-even sales as a percentage of actual sales—can give managers a chance to understand when to expect to break even (by linking the percent to when in the week/month this percent of sales might occur).

The break-even point is a special case of

Target Income Sales , where Target Income is 0 (breaking even).There is a myth that Black Friday is the annual break-even point in American

retail sales, but in fact retailers generally break-even (and indeed profit) nearly every quarter.lololo**Other uses of the term**The break even point is also the point on a

chart indicating the time when something has broken even, and is a general term for not having gained or lost something in a process.In

nuclear fusion research, the term**breakeven**refers to afusion energy gain factor equal to unity, this is also known as theLawson criterion .The notion can also be found in more general phenomena, such as

percolation , and is rather similar to thecritical threshold . In energy, the "breakeven" point is the point where usable energy gotten from a process exceeds the input energy.In

computer science , the term refers to a point in the life cycle of aprogramming language where the language can be used to code its owncompiler or interpreter. This is also called. This usually marks a transition from a "toy" language to a language usable in the real world.self-hosting In

medicine , it is a postulated state when the advances of medicine permit every year an increase of one year or more of the life expectancy "of the living", therefore leading to medical immortality [*cite book*] (barring accidental death).

last = Kurzweil, Grossman

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coauthors = Ray Kurzweil and Terry Grossman

title = Fantastic Voyage: Live Long Enough to Live For Ever

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Break even analysis

*Margin of safety**References****Further reading*** [

*http://www.advanced-excel.com/breakeven.html More about Break-even and calculating Breakeven using Excel Goal Seek*]

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