Break even point: Difference between revisions
imported>Doug Williamson (Add link.) |
imported>Doug Williamson (Expand.) |
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1. | 1. ''Cost and management accounting.'' | ||
(BEP). | (BEP). | ||
In cost and management accounting, the break even point is 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 incur a loss. | |||
2. | 2. | ||
Break even point also refers to the market price at which a strategy results in neither a profit nor a loss. | |||
3. | 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. | 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. | So when the break even point is crossed, the optimum decision or choice will change. | ||
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* [[Out-turn]] | * [[Out-turn]] | ||
* [[Sensitivity analysis]] | * [[Sensitivity analysis]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
Revision as of 20:36, 6 February 2019
1. Cost and management accounting.
(BEP).
In cost and management accounting, the break even point is 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 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.
