How to calculare the break even point for quantity and for sales?

business concepts
New answer on Feb 22, 2021
3 Answers
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Anonymous A asked on Feb 20, 2021

Hello everyone,

I struggle with cases where I have to calculate the break-even point and I was wondering what approach do you suggest both for quantity and for sales so that I can understand it once and for all :-)

Thank you!

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Francesco
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replied on Feb 21, 2021
#1 Coach for Sessions (4.000+) | 1.400+ 5-Star Reviews | Proven Success (➡ InterviewOffers.com) | Ex BCG | 9Y+ Coaching

Hi there,

To find the quantity to breakeven, you can just rearrange the breakeven formula, which is the following:

R-VC-FC=0

⇔ p*q-c*q-FC=0

Where

  • R= Revenues
  • VC= Variable Costs
  • FC = Fixed Costs
  • p = Price
  • q = Quantity
  • c = Variable Cost per Unit

To calculate the quantity, you can rearrange as follows:

p*q-c*q-FC=0

⇔ q=FC/(p-c)

Hope this helps,

Francesco

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Ian
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replied on Feb 20, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

Breakeven is tough as there are so many scenarios! Just remember, all breakeven is, is solving for x, where x is some number to figure out how much of something we need.

The formula you create is specific to the case. So, we may say: We make $20 profit per shoe, and we spent $1,000 to create the shoe stand. How many shoes do we need to breakeven?

In this case, the formula is 1,000 = $20 x ====> x = 50 shoes

Understood? Feel free to message if you'd like to go through multiple examples/scenarios!

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Clara
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replied on Feb 22, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

There are multiple ways, but hte most common one is dividing all costs into the contribution margin.

For example, imagine you borrow 100 for a coffee machine, and you sell coffees for 1 USD, or which you have costs of 90 cents.

Contribution margin is 10 cents, and break even would be 100/ 0.1

Hope it helps!

Cheers,

Clara

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Francesco gave the best answer

Francesco

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