Break-Even Point
Accounting glossary · Understand, connect, apply
The break-even point is the sales level at which total revenue equals total costs and operating profit is zero under the stated cost-volume-profit assumptions.
Example
Fixed costs are 12,000 and unit contribution is 20. Break-even sales are 600 units. At a price of 50, this equals revenue of 30,000.
Formula and assumptions
Break-even units = fixed costs ÷ contribution per unit
Remember the difference
The simple formula assumes positive unit contribution, a stable price and cost structure, and a relevant activity range. Multi-product calculations also need a specified sales mix.
Browse the accounting glossary → · Follow a learning path
Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary