Break-even point is that point where the total cost becomes equal to the total revenue generated from a business. In simpler words, it is defined as that point where there is no net profit or loss. It is an important tool because it explains the relationship between prices, volume, and costs of a business. This helps the managers to make important decisions by keeping pricing strategy and costing in mind.
It also shows the minimum amount of business activity required to avoid losses.
The formula: Break-even point units = Total Fixed cost/ (Selling Price per unit – Variable Costs per unit) is used to calculate the break-even point units.
Accounting assignment help can be hired to enable one to prepare a better description of the break-even point.