Q:

What is the break even formula in accounting?

A:

Quick Answer

The break-even formula is "sales - costs = 0." The break-even point is when the revenue a product generates is equal to the expenses. It is essentially when a product is profit neutral.

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What is the break even formula in accounting?
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Full Answer

There are various measurements of profit or margin. Contribution margin is profit that remains after subtracting variable expenses from sales. Gross profit is money that remains after subtracting variable and fixed costs from sales. Cost of goods sold refers to variable and fixed costs combined. The third common measurement used in accounting is operating profit. Operating profit is what remains after the cost of goods sold, sales expenses, general expenses and administrative expenses are subtracted from revenue.

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