Basically, it’s the moment in which sales or total revenues of a company are equal the total costs of the same, generating a situation in which the company does not win or lose, but that over that point the company begins to win and lose if you step off of the same. To calculate the break-even point, it is necessary to decompose total costs in fixed total and total variables. Also, the volume of total income or monthly actually sold production, you must know the unit price of the product. These variables have the following composition: total fixed cost: composed of costs and fixed expenses: salaries of owner, general expenses, administrative expenses, other expenses. Monthly production volume: that is the volume of a single type of product sold per month. Unit price of the item: is the selling price to the public. Total Variable cost: Is the cost of materials + labor force corresponding to the current production level. For even more details, read what Daryl Katz says on the issue. Deduction of Formula of the point of balance leave, from the following premise: that the total revenue (It) they are exactly equal to the total costs (TC), presenting what was said in the form of equation of equality will be the following: It = Ct.Does (1) on the other hand, we know that total revenues are the result of the product of units produced and sold (XV) for the price of the product (PVU), representing this equation as follows: It = Xv? PVU.(2) In addition, the total cost (TC), is the sum of the total fixed cost (Cft) more TCO variable (Cvt), whose equation is represented in the following way: Ct = Cft + Cvt.(3) Note 1: The cost fixed Total (Cft) is a value that remains constant regardless of the level of production; that is, for example: If there is 10,000 units of a product in the month, or none, the total fixed cost will be exactly the same value.

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