Break-even point is a point where a company faces a win-win situation; Means Company’s all debts are paid and gain no income. There is loss or profit at this point. Break-even point is a term used in financial analysis. A company can have a lower or higher break-even point.
The calculating break-even point is a little bit risky for business owners. If company variable and fixed costs details are there then only you can calculate the break-even point of the company.
Breakeven point = Fixed costs / Price – Variable costs
Fixed costs – Not depend on sales quantity. For example – Office rent, Machinery cost etc.
Variable Cost – Depend on sales quantity.