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At a break-even point, a business has neither profit nor loss. Break-even analysis is often used to predict and plan for the future. The break-even point is given by the quantity for which
REVENUES = FIXED COSTS + VARIABLE COSTS
where revenues and variable costs are estimated for various levels of production. A graphical representation shows that as fixed and variable costs increase, so does the break-even point. The break-even formula is modified to required a given profit.
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