Every business needs to know how many sales have to be made before all expenses are covered and profit is made. Break even analysis is used to find the break even point. The break even point is the number of units sold at which the revenue from the sale of these units equals the cost of producing these units. The cost of producing these units includes the fixed cost and variable costs.
See Business Financials Margins, Mark up and Break Even and read the Business Essentials PDF on Break Even Analysis.
The formula for calculating the break-even point is:
Break even point (number of units to sell) = Fixed costs / (Unit selling price – Variable cost)