About Lesson
a. The break-even point of a company is the point at which the net income of the company equals zero.
b. In other words, the total costs of the company are equal to the total revenue.
c. At the break-even point, the company is in a no-profit no-loss situation.
d. We can thus write the following equation for the break-even point:
P×Q = V×Q – F – C Where, P = Price of the goods sold, Q = Quantity of goods sold, V = Variable cost per unit, F = Fixed operating cost, and C = Fixed financial cost. |
e. In other words, we can write the equation for break-even quantity of goods sold as:
QBE = (F+C) / (P-V)