Final answer:
The break-even point is the sales volume necessary to cover all variable and fixed costs, resulting in no profit or loss.
Step-by-step explanation:
The volume of sales needed to cover total variable and fixed costs is known as the break-even point. At the break-even point, a firm's revenue is exactly equal to its total costs, which means there is no profit or loss. Understanding the relationship between production and costs is crucial for businesses. Companies analyze costs in terms of total cost, fixed cost, variable cost, marginal cost, and average cost to evaluate patterns and determine potential profit. To calculate the break-even point, total fixed costs are divided by the contribution margin per unit (sales price per unit minus variable cost per unit).