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Breakeven also known as the cost volume profit analysis is a way to find out how much revenue or sales are needed to reach a point where the profits are exactly zero. In other words, it means the amount of sales needed to cover up all the variable and fixed costs. This is the point where the total revenue is equal to the cost, TR = TC. The breakeven can be found in both the number of units and sales dollars. This tells the firms that how much they need to produce to cover up their costs and an production above this level will contribute to profits.
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