C4 Break-even point and break-even analysis GapFill

Break even relates to the relationship between  direct costsfixed costsindirect coststotal costs and  margin of safetyrevenuetotal revenueincome. Break even occurs when these two figures are equal. Break even is measured in  profitunits soldrevenueunits purchased. Care must be taken to round up a figure in  decimalseurossterlingcustomers as it is not possible to sell part of a whole unit to a customer. 

Break even does not show  how latehow widehow longhow early it will take to reach the break-even quantity. This means that businesses have to also think about how  specificallygenerallybroadlyquickly they expect to sell this amount of units. Break even is difficult to use when the business has a  product life cycleproduct portfoliolaunchgrowth because each product will need a separate calculation for break even. It's easier to use in a new business with one product, or for a specific project or purchase of a new  advertsocial mediamember of staffmachine in a larger business. 

Break even can help business owners make plans and decisions based on the quantity of sales needed to break even, though it can't deal easily with  changes in pricenew staffadvertisingnew products.  

Equally, decisions may have been made based on break-even quantities that can change if businesses make large  mistakesphone callsinvestmentsorders for raw materials, because this usually results in a discount. Discounts can reduce costs, and therefore the break-even point  updatesincreasesstays the samereduces.