BMGT258 Enterprise Planning and Analysis

Break Even Analysis Formula Sheet

We may need:

 Fixed Costs
 Variable Cost per Unit
 Units Produced
 Selling Price per Unit

Total Variable Costs = Variable Cost per unit * Units Produced

Total Costs = Fixed Costs + (Variable Cost * Units Produced)

Total REVENUE = Units Produced * Selling Price per Unit

Total PROFITS = {Unit Produced * Selling Price per Unit} – {Fixed Costs + (Variable Cost * Units Produced)}

Mathematically we can break this down:

At BREAK EVEN…………… Total Profits = ZERO

ZERO = {Unit Produced * Selling Price per Unit} – {Fixed Costs + (Variable Cost * Units Produced)}

Therefore..

Unit Break Even (ZERO Profit):

QBEP  

Contribution Margin

Q@ specific profit amount  


Note: With this formula you could also solve for Selling Price given a desired profit and
quantity.