What Is Break-Even Analysis?
Break-even analysis is a technique that is used to determine the point at which a company will start to make a profit, or "break even." The break-even point is determined by calculating the total fixed costs and the total variable costs of a company. Once these costs are known, the break-even point can be calculated by dividing the fixed costs by the contribution margin. The contribution margin is the difference between the selling price and the variable costs.
