Break-Even Point in Units

A printable cheatsheet with calculations
and notes

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Break-Even Point in Units

Break-Even Point in Units =

Fixed cost

(Sale price per unit - variable cost per unit)

INTERPRETATION

The break-even point in units is the amount of revenues or units that must sell to cover fixed and variable costs associated with making the sales.

Business owners, managers, and other interested parties use it to calculate the level of sales where a project will be profitable.

Note: expanded calculation

Divide the total fixed production costs by the price per unit, less the variable costs to produce the product.

Break-even point in units = Fixed costs ÷ Contribution margin per unit

EXAMPLE

Total fixed costs: $500,000

Variable costs per unit: $300

Sale price per unit: $500

Desired profits: $200,000

Break-even point per unit = $500,000 / ($500 – $300) = 2500 units

Break-even point in dollars = 2500 units x $500 = $1,250,000

Break-even analysis = ($200,000 / ($500 – $300)) + 2500 units = 3500 units

BENCHMARK: ROT

At the break-even point, there is no net profit or no net loss; the revenues equal its expenses– the company “broke even.”

Break-Even Point in Units :

ABBREVIATION KEY:

ROT: Rule of thumb
HA: Historical Average (organization’s historical average)
PG: Peer Group average
EB: Economic Benchmark

DISCLAIMER: The interactive calculators on this site are self-help tools intended to help you visualize and explore your financial information. They are not intended to replace the advice of a qualified professional. Because each business is different, we can not guarantee accuracy.