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At what point will the revenue you generate cover all your costs – that is both...

At what point will the revenue you generate cover all your costs – that is both your fixed and variable costs. It’s thereafter that you start making a profit, assuming that there is no addition to your fixed costs or any adjustment needed to your variable costs, i.e. the break-even point will increase when the variable expenses increase without a corresponding increase in your selling price.

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It is pertinent here to note that breakeven point is that level of sales where company is in a no profit no loss situation, i.e. at breakeven point in addition to variable cost it would have also recovered fixed cost incurred by it. Hence any revenue beyond breakeven point will contribute to the profit of the company.

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