|Fixed Cost ($)||Variable Cost Per Unit ($)||Sales Price Per Unit ($)|
|Break Even Units||Break Even Sales ($)|
How to use this Break Even Point Calculator?
– Enter the value of Fixed Cost for the desired production and sales period.
– Enter the value of Variable Cost and Sales Price Per Unit.
– Press CALCULATE to calculate the units of products and sales required to reach the break even point.
– Click RESET to reset the entered values and start a new calculation. (You can also start new calculation without pressing RESET)
You can add this Break Even Point Calculator to your website. Click below to get the code.
What is Break Even Point?
Break Even Point is the volume of sales that makes total cost and total revenue equal and all the sales after the break even generate profit. Break Even Point Calculator comes in handy making the repetitive calculation simple.
There is neither loss nor profit at the point of break even.
Break even point is essential to estimate the minimum total products required to produce. It also helps to check the state of profitability during sales and suggests to determine the degree of marketing required to reach the minimum sales. Break even point can be used to calibrate the performance of different marketing strategies.
How to Calculate Break Even Point?
Break Even Point is simply calculated by equating total revenue with the total cost. If Q is the sales unit, P is per unit price and V is variable cost per unit, then
Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC) = FC + Q * V ——– (1)
Total Revenue (TR) = Q * P ——– (2)
If we equate (1) and (2), we get break even point of quantity.
FC + Q * V = Q * P
Q * (P – V) = FC
Q = FC / (P – V) ——– (3)
The expression (3) represents the formulation to calculate the break even point expressed as:
Break Even Units of Sales (Q) = Fixed Cost (FC) / (Per Unit Price(P) – Per Unit Variable Cost(V) )
The difference between per unit price and per unit variable cost (P – V) is also known as Unit Contribution Margin (C).
Now, the expression (3) becomes
Q = FC / C
The revenue or total sales in which the break even occurs is calculated by multiplying break even quantity (Q) with per unit price (P).
Break Even in Sales ($) = (FC / C) * P
You can check these expressions and above calculator at the same time to validate your results.