Cost & Pricing Details
Rent, salaries, insurance, etc.
Materials, labor per unit, etc.
Break-even Point
200 units
Break-even Revenue
20,000
Contribution Margin
50/unit
Contribution Margin %
50%
Profit per Unit (after BE)
50
What is Break-even Analysis?
Break-even analysis determines the point at which total revenue equals total costs, resulting in zero profit or loss. It's a crucial tool for business planning and decision-making.
Break-even Formulas
Break-even (units) = Fixed Costs / (Selling Price - Variable Cost)
Break-even (revenue) = Break-even units × Selling Price
Contribution Margin = Selling Price - Variable Cost
Break-even (revenue) = Break-even units × Selling Price
Contribution Margin = Selling Price - Variable Cost
Key Components
- Fixed Costs: Costs that don't change with production volume (rent, salaries)
- Variable Costs: Costs that vary with each unit produced (materials, direct labor)
- Contribution Margin: Amount each unit contributes to covering fixed costs