Break-even analysis is used to determine when your business will be able to cover all its expenses and begin to make a profit.
The level of sales at which profit is zero is called the break-even point. To calculate your break-even point, you will need to identify your fixed and variable costs.
Fixed costs are expenses that do not vary with sales volume, such as rent and administrative salaries: these expenses must be paid regardless of sales, and are often referred to as overhead costs.
Variable costs fluctuate directly with sales volume, such as purchasing inventory, shipping, and manufacturing a product.
The break-even point is when both variable and fixed expenses are fully covered.
Unit sales to break even = Fixed Expenses/(Unit selling price – Unit variable cost)
Dirham sales to break even = Unit sales to break even* Unit price