Accounting › Section Q · Cost-volume-profit analysis › Topic Q.2
The break-even point
Before a business can earn a profit, its sales must cover every fixed cost. The break-even point tells managers how many units, or how many sales dollars, that takes, and the same formula then answers "how much must we sell to earn a target profit?"
In this topic
- What break-even means
- The equation method
- Break-even in units
- Break-even in sales dollars
- Worked example: proving Quillmoor's break-even
- Reading the CVP graph
- The assumptions behind the numbers
- Target profit
- Target profit after tax
- Worked example: a service business
- Common mistakes to avoid
- Key takeaways
This topic is part of Wuanberri Pro. Checking your access…