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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.
An economic model in international trade that illustrates a situation where a government can subsidize domestic firms to help them in their competition against foreign producers and in doing so enhances national welfare. break-even. Also called the break-even point (BEP). The point at which total cost and total revenue are equal, i.e. "even".
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 ]
A margin of safety (or safety margin) is the difference between the intrinsic value of a stock and its market price.. Another definition: In break-even analysis, from the discipline of accounting, margin of safety is how much output or sales level can fall before a business reaches its break-even point.
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.
In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms optimize their production process by minimizing cost consistent with each possible level of production, and the result is a cost curve.
The break-even analysis determines the point which the business's revenue is equivalent to the costs required to receive that revenue. It first calculates a margin of safety (the point which the revenue exceeds the break-even point) as that is the "safe" amount which the revenue can fall whilst still remaining to be above the break-even point. [30]
In Cost-Volume-Profit Analysis, where it simplifies calculation of net income and, especially, break-even analysis.. Given the contribution margin, a manager can easily compute breakeven and target income sales, and make better decisions about whether to add or subtract a product line, about how to price a product or service, and about how to structure sales commissions or bonuses.