Finance and accounting
Break-even analysis calculator
Break-even point in units and revenue from fixed costs, price and variable cost per unit, with target-profit volume and margin of safety.
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Result
Method and limits
Each unit sold contributes its price minus its variable cost towards fixed costs. Break-even is where total contribution equals fixed costs.
Break-even units = fixed costs / (price − variable cost per unit)
Units for a target profit = (fixed costs + target) / (price − variable cost)
Margin of safety = (expected units − break-even units) / expected unitsAssumptions and limits
- Price and variable cost per unit are constant, and fixed costs do not change within the volume range.
- One product, or a constant sales mix.
- An educational calculation, not financial, tax, legal or investment advice.
Worked example
Fixed costs 50,000, price 25 and variable cost 15 give a contribution of 10 a unit and a break-even of 5,000 units, or 125,000 in revenue. A 20,000 profit needs 7,000 units; at 7,000 expected units the margin of safety is 28.57%.
References
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