An essential formula I learned in my undergraduate studies to determine the breakeven point of a business. The formula below is very useful for breakeven analysis. I coded a simple calculator in JavaScript that calculates the amount of units needed to be produced and sold to cover costs.
The contribution margin, incremental profit per unit, is (Unit Price – Variable Unit Cost). The total fixed costs are divided by the contribution margin
to reach the units required for break even.
Note: Units are always rounded up because fractional units can’t be sold.
View my Javascript Code.