Definition:
Break-Even Point used for the calculation of Margin of safety by comparing the revenue’s amount or units that must be sold in order to cover fixed and variable cost associated with making sales.
It is used to calculate the profitability of the business by equating the total revenue with total expenses of the business. In managerial accounting and for cost accounting this equation use for different purpose.
The main purpose of Break-even point is to calculate the profit of the business after the met of fixed and variable cost. For many other concepts, this ratio is also used.
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