Break Even Point.

Q76. What is Break Even Point? What are types of Break Even Point?
Ans. The Break Even Point means the sale value at which there is neither a profit nor a loss. In other words, it is the point where contribution is equal to fixed cost.

Types of Break Even Point:

  1. Cash Break Even Point: While computing the Break Even Point if only cash fixed costs are considered, the Break Even Point so computed is called Cash Break Even Point.
  2. Composite Break Even Point: It is a single Break Even Point in the case of firms manufacturing two or more products. Composite Break Even Point is determined by dividing the total fixed costs by composite P/V ratio.
  3.  Cost Break Even Point: It is a situation under which the costs of operating two alternative plants are equal.