Break-Even Point
The exact number of sales needed to cover all costs — neither profit nor loss.
Formula
Break-Even Point = Fixed Costs ÷ (Selling Price − Variable Cost per Unit)
Real World
A small bakery with £3,000 monthly fixed costs, selling loaves at £4 with £1 variable cost, must sell exactly 1,000 loaves per month before it starts earning profit.
Exam Focus
Never confuse contribution per unit with profit per unit; contribution ignores fixed costs — state this distinction clearly in show/calculate questions.
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