BREAK EVEN POINT (BEP)

The break-even point (BEP) is the point at which cost or expenses and revenue are equal. If you go above break even point this will mean you have a profit.

fixed cost / (selling price - variable cost)

fixed costs are defined as expenses that do not change as a function

Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases

The total cost is the amount of money spent by a firm on producing a given level of output. Total costs are made up of fixed costs (FC) and variable costs (VC).

Revenue is the income earned by a business over a period of time, eg one month. The amount of revenue earned depends on two things - the number of items sold and their selling price. In short, revenue = price x quantity.

For example, the total revenue raised by selling 2,000 items priced £30 each is 2,000 x £30 = £60,000.