Break even point: Difference between revisions
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imported>Doug Williamson (Give example and link with Out-turn page.) |
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3. | 3. | ||
A point - | A 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. | 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 breakeven point is crossed, the optimum decision or choice will change. | So when the breakeven point is crossed, the optimum decision or choice will change. | ||
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* [[Fixed cost]] | * [[Fixed cost]] | ||
* [[Margin of safety]] | * [[Margin of safety]] | ||
* [[Out-turn]] | |||
* [[Sensitivity analysis]] | * [[Sensitivity analysis]] | ||
Revision as of 10:56, 9 October 2015
1. (BEP). The number of units of production at which contribution is equal to total fixed cost, in other words this is the level of production at which a producer will neither earn a profit nor make a loss.
2. The market price at which a strategy results in neither a profit nor a loss.
3. A 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 breakeven point is crossed, the optimum decision or choice will change.
