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Break even calculation

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New answer on Nov 11, 2023
2 Answers
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Maximilian
Premium
asked on Nov 10, 2023
Oliver Wyman

to get to the break-even point in units I have used the formula  Revenue = cost. QTY x selling price = (variable cost x qty) +FC. With this formula, I'll get 34 units that they must produce in order to become profitable. But solution indicates 9 units. can someone please explain that to me. 

 

Thanks 

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Cristian
Expert
Content Creator
replied on Nov 10, 2023
#1 rated MBB & McKinsey Coach

Hi Maximilian,

If it helps, your formula is correct. 

Where the mistake appears is unclear to me. There might also just be an issue with the case. 

What would matter in a real life scenario is that you align the formula with the interviewer (i.e., the approach for solving the problem) and then go ahead with the computations step by step so they follow what you are doing.

Also, if you are looking into other common formulas and terms for interviews, the following resource might be useful:


Good luck!
Cristian

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Ian
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replied on Nov 11, 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hey Maximilian,

Just to add to Cristian's answer, make sure you're learning how to apply breakeven. As breakeven can apply to many different formulas (solving for years, age, price, quantity, etc.)

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Cristian

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