Methods to Calculate Break Even Point in Sales ($) Value:
Break even point in sales ($) value may be calculated in two ways but both give the same answer:
Contribution ratio is calculated as:
Contribution ratio may be improved by:
- Increasing the sale price.
- Reducing the variable costs.
- Switching production to products with higher contribution rate.
Break-even point in value may also be calculated as:
A company has a product, which is sold @ $21 per unit. The per unit variable costs are $14. Fixed costs are $0.70 per unit at the budgeted production level of 300000 units.
What is the break even level in units and sales revenue?
To read another solved example, click target profits page. On this page solved example 2 is relevant to this article.