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Break-even point definition:

A break-even point is the level of output at which total revenue equals total cost, and both are equal to zero. It is a concept used in accounting and business management to analyze what happens when there are no profits or losses for a company. A firm reaches this equilibrium position where normal profit occurs when it produces the quantity that maximizes its total revenue minus its total cost.

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This article will discuss how firms reach this break-even point through an analysis of marginal costing, average costs, aggregate production functions, and more!

A firm’s break-even point can be calculated by dividing fixed expenses by expected sales volume (sales .times price), producing two variables.


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