– Total Revenue (TR) which is calculated as number of products sold times unit price
– Total Fixed Costs (TFC) generally this number will not change unless the analysis is for a large range / changes in the revenue
– Total Variable Cost (TVC) which varies directly with the number of products sold
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The Profit (P) is calculated as total revenue minus total cost:
P = TR –TC
Where:
TR = Unit Price x Units Sold
TC = TFC + TVC
The Break-Even Point shows the number of units the company must sell in order to break even or generate zero profit.
The Break-Even Revenue shows the revenue the company must make in order to break even or generate zero profit.
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