Break-Even Output - GCSE Business Definition

Break-even output refers to the level of sales a business must achieve in order to cover all its costs, without making a profit or a loss. At this point, the total revenue generated from selling goods or services precisely matches the total costs of production, which includes both fixed and variable costs.

The break even output is expressed in units and is calculated using the formula:

Understanding break-even output is crucial for businesses as it helps them determine the minimum sales volume required to avoid financial loss. For GCSE Business students, this concept is important because it aids in making informed decisions about pricing, production, and sales strategies. Calculating the break-even output helps businesses plan more effectively and manage their resources efficiently.