The break even point for a product is the point where total revenue received equals the total costs associated with the sale of teh product (TR= TC). A break-even point is typically calculated in order fro business to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. Break even analysis can also be used to analyse thepotential profitability of an expenditure in a sales-based business.
break even point (for output)=fixed cost / contribution per
unit.
Contribution
(p.u) = Selling price (p.u)- variable cost (p.u).
break
even point (for sales) = fixed cost/contribution (p.u) * sp (pu).