Break-Even Point Formula is also called Break-Even Analysis Formula. It is used to calculate the number of sales that equates the revenue to expenses and excess revenue amount known as profit after the fixed and variable cost are met.
Break-Even Point Formula
Break-Even Point Formula calculated by Dividing the fixed cost of production by the Difference of sales price per unit and variable cost per unit.
Break-Even Point in Unit= Fixed Cost/(Sales Price Per Unit – Variable Cost Per Unit)
The difference in sales price per unit and variable cost per unit is the definition of Contribution Margin Per Unit So the above formula can be written as.
Break-Even Point in Unit= Fixed Cost/Contribution Margin Per Unit