Breakeven Sales Volume

Breakeven sales volume, abbreviated as BSV, also called break-even point, is the level of sales at which a company's total revenues equal its total costs, resulting in neither profit nor loss.  In other words, it's the point where the company's sales cover all its expenses, both variable and fixed.

The breakeven sales volume helps businesses understand the level of sales they need to achieve in order to cover all their costs and start generating profits.  It is a metric for planning and decision making, as it provides insights into the minimum sales targets required to sustain operations and make a profit.

 

Breakeven Sales Volume Formula

\( BSV =  FC \;/\; SP - VC  \)

Symbol

\( BSV \) = breakeven sales volume

\( FC \) = fixed cost

\( SP \) = selling price

\( VC \) = variable cost per unit