Question 1

What is break-even point?

Accepted Answer

The break-even point is where total revenue equals total costs — no profit, no loss. Below it you lose money; above it you profit.

Question 2

What is the break-even formula?

Accepted Answer

Break-even units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit). Contribution margin = Selling Price − Variable Cost.

Question 3

Why is break-even analysis important?

Accepted Answer

It helps you set prices, understand minimum sales needed, and evaluate whether a business idea is viable.

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