Break-even point

Break-even point is the sales volume at which total contribution margin exactly covers total fixed costs, leaving profit at zero. Below this level the business makes a loss; every unit above it adds directly to profit.

Also known asBEP · breakeven

ByHoang TruongUpdated June 30, 2026

FrameworkCost-volume-profit (CVP) analysis

See it move

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A cost-volume-profit chart plots a revenue line and a total cost line against units sold; the two lines intersect at 4,000 units and €160,000 of revenue — the break-even point, derived from fixed costs of €60,000 divided by a contribution margin of €15 per unit. Volumes below the crossing produce a loss; volumes above it generate profit at €15 per additional unit.

Where it fits

SubjectCost AccountingCoreTopicCost-Volume-Profit AnalysisCore

The formula

LaTeX

Q_{BE} = \frac{FC}{CM_{unit}}

Variables

$Q_{B E}$: Break-even quantity (units)
$F C$: Total fixed costs (€)
$C M_{u ni t}$: Contribution margin per unit (selling price − variable cost per unit) (€ per unit)

At this volume, total contribution exactly covers total fixed costs and profit equals zero.

LaTeX

S_{BE} = \frac{FC}{CM\%}

Variables

$S_{B E}$: Break-even sales revenue (€)
$F C$: Total fixed costs (€)
$C M$: Contribution margin ratio (CM per unit ÷ selling price)

Expresses break-even as a revenue figure, useful when working in sales value rather than units.

Check yourself

PracticeCORE

A business has annual fixed costs of €54,000, a selling price of €45 per unit, and variable costs of €27 per unit. How many units must it sell to break even?

Select an answer to check your understanding.