Break Even Point

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Definition:

Break even point shows the output level (units produced or services rendered) at which total revenues just equals to total costs or point at which profit or loss is zero. Though break-even point may be shown in number of units or in terms of revenue, it is commonly expressed in terms of output units.

Formula:

The following equation represents break-even point:

break-even-point-formula

Solved Example:

Following are the information relating to Gino’s Pizza:

break-even-point-example-1

Required:

Calculate break-even point in units.

Solution:

break-even-point-example-2