How to calculate break even value
How to calculate breakeven In its simplest terms, breakeven occurs when your business is neither making nor losing money. In other words, Revenue = total expenses For example, think about two types of expenses: fixed costs and variable costs. Fixed costs are those that don't change as the number of units you sell grows. For example, if you are a retail store, rent is likely to be the same regardless of the number of units sold. On the other hand, variable costs are those that increase as the number of units you sell grows. Again, if you are a retail store, when the number of units increases, the money you pay for the merchandise you sell will also increase. These costs vary with the number of units sold. Therefore: Total expense = variable costs + fixed costs Variable costs may be expressed as the number of units sold times the variable cost per unit. Therefore, Total expense = (units x variable cost per unit) + fixed costs Obviously, the variable cost per unit will