The break-even point is that level of activity where:

1. total contribution margin equals the sum of variable cost plus fixed cost.
2. contribution margin equals fixed cost.
3. variable cost equals fixed cost.
4. sales revenue equals total variable cost.
5. sales revenue equals fixed cost.

2. contribution margin equals fixed cost.

Explanation:

Break-even point is the point at which a business does not make any profits or losses. At break-even, the total cost equal to total revenue.  Business express break-even as the number of units produced or sold or revenue generated.

In calculating the break-even point, a business must understand its costs and revenues.  Business expenses are classified into fixed and variable costs. At break even, the total revenue will match the total of fixed and variable costs.

The contribution margin is the result of the difference between the selling price and variable cost. Therefore, the contribution margin takes care of the variable costs. If the contribution margin matches break-even, a business will not make any loss or profits.

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

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