In simple words, the break-even point can be defined as a point where total costs (expenses) and total sales (revenue) are equal. The origins of break-even point can be found in the economic concepts of “the point of indifference.” Calculating the break-even point of a company has proved to be a simple but quantitative tool for the managers. Adding more to the point, break-even analysis is a simple tool defining the lowest quantity of sales which will include both variable and fixed costs.
Another important usage of the break-even point is that it is helpful in recognizing the relevance of fixed and variable cost.
I had an idea about it, but I understood it more as you made it simple to understand so thank you.
Fresco of Approving of bylaw of Society of Jesus depicting Ignatius of Loyola receiving papal bull Regimini militantis Ecclesiae from Pope Paul 3. This group bound themselves by a vow of poverty and chastity, to "enter upon hospital and missionary work in Jerusalem, or to go without questioning wherever the pope might direct".


They called themselves the Company of Jesus, and also Amigos En El Senor or "Friends in the Lord," because they felt "they were placed together by Christ." The name had echoes of the military (as in an infantry "company"), as well as of discipleship (the "companions" of Jesus). The break-even analysis, in its simplest form, facilitates an insight into the fact about revenue from a product or service incorporates the ability to cover the relevant production cost of that particular product or service or not.
Moreover, such analysis facilitates the managers with a quantity which can be used to evaluate the future demand.
The fixed cost is less with a more flexible personnel and equipment thereby resulting in a lower break-even point. Ignatius of Loyola, who after being wounded in a battle, experienced a religious conversion and composed the Spiritual Exercises to closely follow Christ. The fresco was created by Johann Christoph Handke in the Church of Our Lady Of the Snow in Olomouc after 1743. Moreover, the break-even point is also helpful to managers as the provided info can be used in making important decisions in business, for example preparing competitive bids, setting prices, and applying for loans.


If, in case, the break-even point lies above the estimated demand, reflecting a loss on the product, the manager can use this info for taking various decisions. The importance of break-even point, therefore, cannot be overstated for a sound business and decision making.
He might choose to discontinue the product, or improve the advertising strategies, or even re-price the product to increase demand.



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