breakeven point

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The level of production, sales volume, percentage of capacity, or sales revenue at which an organization makes neither a profit nor a loss. The breakeven point may either be determined by the construction of a breakeven chart or by calculation. The formulae are:

breakeven point (units) = total fixed costs/contribution per unit;

breakeven point (sales) = (total fixed cost × selling price per unit)/contribution per unit.

See also contribution.

Subjects: Economics.

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