BREAK-EVEN ANALYSIS CALCULATOR.

This calculator shows how to determine the sales volume at which revenue covers fixed and variable costs and the volume required to achieve a target profit. You can change any of the values below, and this will auto-update all results.

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Fixed costs are incurred during a period regardless of the number of units sold. Variable costs change with each unit produced or delivered. The contribution per unit is the selling price minus the variable cost per unit. It represents the amount from each sale that is available to cover fixed costs and, after fixed costs have been recovered, generate profit.

The break-even volume is calculated by dividing fixed costs by contribution per unit. The contribution margin ratio is calculated by dividing contribution per unit by selling price. Break-even sales revenue is calculated by dividing fixed costs by the contribution margin ratio. To calculate the sales volume required for a target profit, add the target profit to fixed costs and divide the total by contribution per unit.

a break-even analysis example

Let's assume a business has fixed costs of £50,000 for a period, sells one product for £100 per unit, incurs £40 in variable cost per unit and wants to earn a target profit of £25,000. This means that

  1. contribution per unit is £100 - £40 = £60
  2. the contribution margin ratio is £60 / £100 = 60%
  3. the break-even volume is £50,000 / £60 = 833.33 units, which rounds up to 834 units
  4. break-even sales revenue is £50,000 / 60% = approximately £83,333
  5. the volume required for a £25,000 target profit is (£50,000 + £25,000) / £60 = 1,250 units

break-even analysis calculator

To use the calculator, enter the currency, fixed costs, selling price per unit, variable cost per unit and target profit for a consistent period. The calculator will compute contribution, break-even volume, break-even sales revenue and the volume required for the target profit.


 

 

 

 

 
Contribution per Unit
£60
 
Contribution Margin Ratio
60.0%
 
Break-even Volume
834 units
 
Break-even Sales Revenue
£83,333
 
Volume for Target Profit
1,250 units
 
Interpretation
 

FREQUENTLY ASKED QUESTIONS.

  1. What is the break-even point?

    The break-even point is the sales volume at which total revenue equals total fixed and variable costs, resulting in neither profit nor loss.

  2. What is contribution per unit?

    Contribution per unit is selling price minus variable cost per unit. Each unit's contribution first covers fixed costs and then contributes to profit.

  3. Why does the calculator round break-even units up?

    Most businesses cannot sell a fraction of a unit. Rounding up ensures that the displayed whole-unit volume covers all fixed costs.

  4. How is target-profit volume calculated?

    Add the desired target profit to fixed costs, then divide the result by contribution per unit. The calculator rounds the result up to a whole unit.

  5. Can this calculator model several products?

    This calculator assumes one product with constant price and variable cost. A multi-product analysis requires a weighted average contribution margin based on the expected sales mix.

CREDITS & REFERENCES

  1. U.S. Small Business Administration: Break-even point formulas and guidance
  2. Other tools: Equity Dilution Calculator, Margin Calculator, Markup Calculator, Margin and Markup Calculator, Percentage Change Calculator, Sales Revenue Target Calculator, Burn Rate & Runway Calculator, Customer Acquisition Cost (CAC) & LTV Calculator, Cap Table / Pre-Money vs. Post-Money Valuation Calculator, Metaverse Startup Ideas and Metaverse Business Opportunities

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