In economics, specifically cost 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.
The quantity 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:
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:
R=C Where R is revenue generated C is cost incurred i.e. Fixed costs + Variable Costs or Q X P(Price per unit)=FC + Q X VC(Price per unit) Q X P - Q X VC=FC Q (P-VC)=FC or Q=FC/P-VC=Break Even Point
The break-even point is a special case of Target Income Sales, where Target Income is 0 (breaking even).
The notion can also be found in more general phenomena, such as percolation, and is rather similar to the critical 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 a programming language where the language can be used to code its own compiler or interpreter. This is also called self-hosting. This usually marks a transition from a "toy" language to a language usable in the real world.
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(barring accidental death).
Break-even analysis--making it work for your franchise: break-even analysis provides a quick and easy tool to screen opportunities, glean competitive information and benchmark operations.
Jul 01, 2009; break-even analysis can be a simple yet powerful tool to help franchisors manage their business. It is also one of the...