Break-even point | Ndzumo Consulting
What is the break-even point ? The break-even point (BE) is the amount of sales needed so you don't make a loss. In other words, the break-even point is where your company total sales is equal to total expenses.
break-even point,Fixed Costs Gross Profit
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Break-even point

Do you currently know the break – even point for your company ?

Why is it important to me ?

It helps you determine the number of sales that need to be made in order to cover your expenses. The higher the expenses for the business, the higher the break-even point will be, meaning the more goods or services you will need to sell.

What is the break-even point ?

The break-even point (BE) is the amount of sales needed so you don’t make a loss. In other words, the break-even point is where your company total sales is equal to total expenses.

Example

  • Selling price per unit R 100
  • Cost of sale per unit R 75
  • Therefore, Gross Profit R 25 or 25%
  • If your total fixed costs are R 200
  • Your break even point is calculated as Total Fixed Costs/ Gross Profit % =     R 200 / 0.25 = R 800
  • This means the company needs to make sales of R 800 to cover expenses and not make a loss.

I have attached a break even calculator for you for ease of calculation.

Thank me later 🙂

Pamella Jabu Ndzumo

Managing Director

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