Formulas for production at break even poin

• Production


  Generates profits
• Formula to calculate break-even point (BEP)

  BEP = fixed cost / contribution per unit
• Contribution


  Selling price per unit minus variable cost per unit
• Calculating BEP


  BEP = fixed cost / contribution per unit

  BEP = 100,000 / (60 - 35)

  BEP = 100,000 / 25

  BEP = 4,000 units
• At the BEP of 4,000 units, the business does not earn any profit and does not incur any loss
• Breakeven point is always calculated in units
• Variable costs: Costs that vary directly with changes in the level of output produced.
• Fixed costs: Costs that remain constant regardless of the level of output produced.