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Accounting & Tax vocabulary · Costs & Budgeting

Break-even point

Meaning in accounting & tax, with examples

nounCommon term

In accounting & tax, break-even point means: The level of sales at which total revenue exactly covers total costs, so the business makes neither a profit nor a loss.

In Turkish: başabaş noktası

How it is used

Calculated as fixed costs divided by the contribution margin per unit. Managers also use the verb: how long will it take to break even?

Example sentences

  1. The new store should reach its break-even point after about 18 months.

  2. At current prices, our break-even point is 40,000 units a year.

Common collocations

  • break even
  • break-even analysis
  • reach break-even
  • break-even sales
  • fixed costA cost that stays the same in total whatever the level of production or sales, at least in the short term, such as rent, insurance or salaried staff.
  • variable costA cost that rises or falls in line with the volume of production or sales, such as raw materials, packaging or sales commissions.
  • budgetA financial plan that sets out expected income and spending for a future period, usually a year, and is used to control costs and compare actual results.
  • forecastAn updated estimate of future results, such as sales, costs or cash, based on actual figures so far and current expectations.

More terms: Costs & Budgeting

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This page explains English vocabulary for learners. It is not financial advice.