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The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. "even". In layman's terms, after all costs are paid for there is neither profit nor loss.
Break-even (or break even), often abbreviated as B/E in finance (sometimes called point of equilibrium), is the point of balance making neither a profit nor a loss. It involves a situation when a business makes just enough revenue to cover its total costs. [ 1 ]
He coined the term break-even point, [2] and developing the break-even chart together with Charles Edward Knoeppel. [ 3 ] Rautenstrauch was instrumental in the creation of Columbia University's Department of Industrial Engineering, which is said to be the first such department in the United States.
The graph on the right shows a typical break-even chart. Contribution refers to sales of the product or service, it can also be interpreted as the business's revenue stream. Fixed costs in this case serves the same purpose as business overheads, it will simply be shown as a straight horizontal line on the graph as shown. [31]
A critical part of CVP analysis is the point where total revenues equal total costs (both fixed and variable costs). At this break-even point, a company will experience no income or loss. This break-even point can be an initial examination that precedes a more detailed CVP analysis.
The break-even point is when the cumulative benefits received from retiring at a later age equal the cumulative benefits received from retiring at an earlier age. This will vary based on when you ...
Experts discuss the health benefits of cooking and baking. Plus, tips for getting the most mental health benefits when cooking.
The same consideration is used whether fixed costs are one dollar or one million dollars.) On the other hand if VC > R then the firm is not even covering its short-run production costs and it should immediately shut down. The rule is conventionally stated in terms of price (average revenue) and average variable costs.