A Single Product Break Even Analysis Example

BEP$ =

F
1 V

Where

BEPx =

BEP
BEPx
F
V
P

F
P V

= Break-even in pound
= Break-even in units where x unit
= Fixed Costs
= Variable Costs per Unit
= Price per Unit (after all discounts)

Example: A Dickie-Dee ice cream cart costs $12,000. Direct labour for the driver amounts to
$1.20 per unit, and Rocket treats cost $0.80 per unit to prepare. The selling price of each
Rocket treat is $3.50. What is the break even point?
Break-even point in dollars:

BEP$ =

F
1 V

P =

Break-even point in units:

BEPx =

F
P V

A Multiple Product Break-Even Analysis Example

F

V
BEP$ =
1 Pi Wi
i

Where Wi = The percent of each product of total sales

Example: The Dickie-Dee cart owner now will sell three types of frozen treats,
Rockets, Zipper-Bars, and Cherry Blasters. Use the information below to calculate
the break even point in dollars.
Item

Price
(P)

Cost
(V)

Rocket
Zipper
Cherry

3.50
3.25
3.60

2.00
1.50
2.10

V/P

1-(V/P)

Annual
Sales
Units
7,000
8,000
4,000

Annual
Sales $

% of
sales

Weight
W

(1-V/P)
xW

F
BEP$ =

V
1 P W
i