EDP Notes

The break-even analysis is the most widely used technique of cost volume profit analysis
used in its narrow sense. It is the point at which losses cease and profits begin. Break-even point is
an equilibrium point or value between costs, prices and profits. Indeed it is a balancing point a point
of no profit no loss. It is also called zero point costs. In a broad sense, it refers to a system of
analysis that can be used to determine the probable profit at any level of activity. It is a tool of
financial analysis whereby the impact on profit position of the changes in volume, price, costs and
mix can be estimated definitely and accurately.