Also known as Break-Even Analysis. It is a method of determining at what point a company’s financial situation is in equilibrium and it makes neither a profit nor a loss. In doing a Sales Break-Even analysis, management will typically calculate the volume of sales and/or income required to cover the costs associated with producing it. If sales/income is predicted to fall below this point, then the operation is deemed unviable or in need of further action, for example reducing the unit cost of producing the item.

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