What does the break-even point reflect
Simply put, by calculating the break-even point, the level of production (services or sales) is determined at which the enterprise remains “at its own”, i.e. no loss, but no profit. The critical point can be compared to a street thermometer for clarity. If the zero mark is taken as a breakeven point, then each upward division gives us a "plus", respectively, dropping below zero, we go to the "minus". So the enterprise, with volumes exceeding the CVP-point, will receive income, if not reaching it - a loss. The break-even point is calculated according to certain formulas. It is necessary to know such indicators of the enterprise as the value of fixed and variable costs, the cost of a unit of products sold, and profit from one unit of production. The break-even point can be determined analytically or graphically.
Change in break-even point
When calculating the CVP point, it is assumed that during the analyzed period of time, prices for both raw materials and products remain unchanged; sales are steady; in the considered range of sales volume, neither variable costs per unit of production nor fixed costs change; and the manufactured products are sold in full. If the enterprise has really stable production (sales) and other parameters, then a low break-even point demonstrates its successful operation. An increase in the critical point value in such conditions signals a deterioration in the company's financial position.
More info here - https://en.wikipedia.org/wiki/Break-even_(economics)
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