branch of COST-VOLUME-PROFIT (CVP) ANALYSIS that determines the break-even point, which is the level of sales where total costs equal total revenue. Thus, zero profit results. Breakeven sales is computed as follows:

Break-even sales in units = Fixed costs/Unit contribution margin.
Break-even sales in dollars = Fixed costs/Contribution margin ratio.

For example, assume:

Fixed costs = $15,000.
Unit contribution margin (selling price unit variable cost) = $15, and
Contribution margin ratio (unit CM/selling price) = .6
Then, break-even sales in units = $15,000/$15 = 1000 units and breakeven
sales in dollars = $15,000/.6 = $25,000.A break-even chart is one in which sales revenue, variable costs, and fixed costs are plotted on the vertical axis while volume is plotted on the horizontal axis. The BREAK-EVEN POINT is the point at which the total sales revenue line intersects the total cost line.