How to use
- Enter monthly fixed costs, price and variable cost per unit.
- Add a target profit if you want more than break-even.
Worked example
Fixed costs $6,000, price $25, variable cost $10: break-even is 400 units ($10,000 revenue).
Supported formats and limits
| Input | Fixed costs, price per unit, variable cost per unit, target profit |
|---|---|
| Output | Break-even units and revenue, chart |
| Engine | Units = (fixed costs + target profit) ÷ (price − variable cost), rounded up |
Limitations
- Assumes a constant price and variable cost per unit at every volume.
- Profit here is before income tax.
Questions
How is the break-even point calculated?
Contribution per unit = price − variable cost. Break-even units = fixed costs ÷ contribution, rounded up to a whole unit, and break-even revenue = units × price. $6,000 fixed costs at $25 price and $10 variable cost is 400 units and $10,000.
What is the margin of safety?
If you enter expected sales, the tool shows how far they are above (or below) the break-even volume, so you can see how much sales could fall before you make a loss.
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