Assumption of Break Even Point

Break even point is the level of sales at which profit is zero. According to this definition, at break even point sales are equal to fixed cost plus variable cost. This concept is further explained by the the following equation:[Break even sales = fixed cost + variable cost].Assumption of Break Even Point is a technique extensively used by production management and management accountants. Sum of variable and fixed costs are matched up to with sales revenue in sort to describe the level of sales volume, sales value or production at which the business makes neither a profit nor a loss that is Assumption of Break Even Point.