Break even point

1. Cost and management accounting.

(BEP).

In cost and management accounting, the break even point is the number of units of production at which total contribution is equal to fixed cost.

In other words this is the level of production at which a producer will neither earn a profit nor incur a loss.

2.

Break even point also refers to the market price at which a strategy results in neither a profit nor a loss.

3.

Break even point can also mean any point - for example an out-turn market price - at which two alternative strategies give the same result.

It is therefore the point of indifference between two choices or strategies. For example two trading strategies each resulting in the same expected profit.

So when the break even point is crossed, the optimum decision or choice will change.

See also

• Break-even
• Contribution
• Fixed cost
• Margin of safety
• Out-turn
• Sensitivity analysis