Break – Even Analysis

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The break-even analysis is the most widely known from of the CVP analysis. The study of CVP relationship is frequently referred to as break-even analysis. However, some state that up to the point of activity where total revenue equals total expenses, the study can be called as break-even analysis and beyond that point, it is the application of CVP relationship.

 

Thus, a narrow in depredation of break-even analysis refers to a system of determining that level of activity where total revenue equals total cost i.e. the point of zero loss. The broader interpretation denotes a system of analysis that can be used to determine the probable profit at any level of activity.

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