Definition
A calculation determining the level of sales at which total revenues equal total costs, resulting in zero profit or loss. Above this point, a business generates profit; below it, a loss.
Formula
Break-Even Units = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
Example
Fixed costs $60,000 ÷ (Price $20 − Variable cost $8) = 5,000 units to break even.