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What increases a break-even point?

Author:
Harold Averkamp, CPA, MBA

Definition of Break-even Point

The break-even point is the volume of sales in units or in dollars that is equal to a company’s total expenses (including the cost of goods sold). In other words, it is the level of sales where the income statement will report a net income of exactly zero.

Examples Causing a Break-even Point to Increase

The break-even point will increase by any of the following:

In short, if a company’s contribution margin per unit decreases, the company’s break-even point will increase.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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