Introduction to Break Even Analysis:
Definition, Use and Components of Break-even Analysis:
Break-even indicates a situation where; there is no profit or loss for a business. “Break-even analysis is undertaken to calculate the level of output and or sales revenue at which a business makes neither a profit nor loss”.
In its broad sense it may be used to determine the probable profit or loss at any given output level. Contribution per unit becomes net profit per unit one break-even point is reached.
To understand the complete concept of break-even analysis, click on the following components of break-even analysis:
(1) Break Even Point
(3) Target Profits
(4) Break Even Chart