Breakeven Point Calculation

Breakeven Point Calculation

Unit Product Cost:
Birim Satış Fiyatı:
Total Fix Cost:

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  • Breakeven Point Analysis

    What is Breakeven Point?

    The break-even point is called the point where a company can cover its expenses and make a profit without making any profit. Its English is "Break-Even Point" and it is also known as "break-even analysis".

    How is the Breakeven Point Calculated?

    We need to have a unit product sales price and unit product cost together with the fixed cost for break-even point calculation. Break-even formula; Break-even Point = Fixed Expenses / (Unit Sales Price - Unit Product Cost). As a result, you will find the minimum number of products that must be sold to cover investments and expenses. We can say that profit will be obtained in all sales after this amount. With this calculation, we have given an example for a business that produces. However, break-even point can be calculated by using the formula in any business and putting the values in the appropriate places.

    Where to Calculate Breakeven Point?

    Break-even analysis is an analysis that allows financial decision making. You can find out what kind of decisions will be helpful in making the following list.
    • Determining the target that should be reached in order to prevent the business from harming,
    • Determining the scenarios that will gain the most profitable or the biggest profit in a short time,
    • Determining the production and price policies to be followed by the company,
    • Determining the strategy according to the relationship between fixed expenses, investment and sales price.

    Breakeven Point Graph

    başabaş noktası grafiği As it is understood from the graph, the point where the total cost meets the income is the break-even point, while the difference between the income obtained from the sales realized later and the cost becomes profit.

    What is Contribution?

    Contribution is the difference between unit product sales price and unit product cost that we use when calculating break-even point. So we can say that there is unit product profit. Contribution = Unit Product Sales Price - Unit Product Cost. In this case, break-even formula will be = Fixed Expenses / Contribution.