Breakeven Analysis

Breakeven Analysis is used to calculate the number of units you need to sell in order to cover all of your fixed and variable costs. 


Break Even Analysis: 

Fixed Costs / (Price per Unit – Cost per Unit) = Quantity to Produce 

Quantity to Produce (Price per Unit – Cost per Unit) – Fixed Cost = Amount Earned 


• Item A is sold for $100 per unit.
• Item A costs $20 per unit 
• Company X has fixed costs of $2,000 

The breakeven point is: 

$2,000 / ($100 - $20) = 25 units