Break Even Sales Revenue Formula

Fixed costs are 0 70 per unit at the budgeted production level of 300000 units.

Break even sales revenue formula. Formula to calculate break even point bep the formula for break even point bep is very simple and calculation for the same is done by dividing the total fixed costs of production by the contribution margin per unit of product manufactured. Break even sales is the dollar amount of revenue at which a business earns a profit of zero. The contribution margin per unit can be calculated by deducting variable costs towards the production of each product from the selling price per unit. Needed sales example ns bes esp.

Break even point in value may also be calculated as. Break even sales formula example 1. According to the cost accountant last year the total variable costs incurred add up to be 1 300 000 on a sales revenue of 2 000 000. Break even point analysis is a measurement system that calculates the margin of safety by comparing the amount of revenues or units that must be sold to cover fixed and variable costs associated with making the sales.

What is the break even level in units and sales revenue. Let us take the example of a company that is engaged in the business of lather shoe manufacturing. The per unit variable costs are 14. In other words it s a way to calculate when a project will be profitable by equating its total revenues with its total expenses.

This way you can know how your product or service sales compare to others in relationship to sales efforts. Break even sales is used in order to calculate the total amount of the revenue level at which there is zero amount of the profit to the business and it is calculated by dividing the total fixed expenses of the company by the contribution margin percentage. A company has a product which is sold 21 per unit. Formula to calculate break even sales.

This sales amount exactly covers the underlying fixed expenses of a business plus all of the variable expenses associated with the sales.