The break-even point is the level of sales at which total revenue equals total costs, resulting in zero profit or loss.

Core Formula

$$Break\text{-}Even\ Units = \frac{\text{Fixed Costs}}{\text{Selling Price} - \text{Variable Costs per Unit}}$$

Key Components:

• Fixed Costs: Expenses that do not change with production volume (rent, salaries).
• Variable Costs: Expenses that vary directly with production volume (materials, packaging).
• Contribution Margin: The difference between the selling price and variable costs per unit.