Break-even point is a state, which is reached when revenue = cost+profit.

Revenue-(fixed cost+variable cost) = profit

So it is: revenue-(fixed cost+variable cost) =0.

Namely: revenue-fixed cost = variable cost.

This formula is generally used to find the sales volume and sales volume of the breakeven point.

The breakeven point can be expressed by sales volume, that is, the sales volume of breakeven point; It can also be expressed in terms of sales, that is, sales at breakeven point. Its basic calculation formula is as follows: F+V×Q=P×Q, where: Q-sales volume F-total fixed cost V-marginal cost P-unit product price.

What is the break-even point?

Break-even analysis is a method to analyze the balance between project cost and income through break-even point (BEP). Changes of various uncertain factors (such as investment, cost, sales volume, product price, project life, etc.). ) will affect the economic effect of investment scheme, and when these factors change to a certain critical value, it will affect the choice of scheme.

The purpose of break-even analysis is to find out this critical value, that is, break-even point (BEP), to judge the tolerance of investment scheme to the change of uncertain factors, and to provide basis for decision-making.

The lower the break-even point, the greater the possibility of profit and the smaller the possibility of loss, so the project has greater ability to resist operational risks. Because the break-even point analysis is to analyze the relationship among output (sales volume), cost and profit, the break-even point is analyzed by weighing the cost and profit. Breakeven point can be expressed in many ways.

It can be expressed by physical output, unit product price, unit product variable cost and annual fixed assembly cost, and it can also be expressed by relative quantities such as production capacity utilization ratio (breakeven point rate), among which production and production capacity utilization ratio are widely used in project uncertainty analysis.

What does the percentage of breakeven point mean? We know that breakeven point is a concept in management accounting. The purpose of calculating the break-even point of an enterprise is to understand the actual production and sales business of the enterprise and what standards the enterprise can achieve. Detailed analysis can refer to our introduction in the above article.