What is the break-even point?

The break-even point is the sales level where total revenue equals total costs. There is neither profit nor loss.

How is the break-even point calculated?

Divide fixed costs by the contribution margin (selling price - variable cost per unit). BEP = Fixed Costs ÷ (Price - Variable Cost).

What is the margin of safety?

The margin of safety indicates how much sales can drop before reaching the break-even point. Calculated as: (Current Sales - Break-Even Sales) ÷ Current Sales × 100.

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