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Determine the exact sales volume and revenue required to cover all fixed and variable costs.
Recurring expenses that do not change with production (rent, salaries, insurance).
Direct costs incurred to make each unit (raw materials, packaging, transaction fees).
Requires $25,000.00 in gross sales revenue
Breakdown of unit sales price
Comparing financial outcome at 50%, 75%, 100% (breakeven), 125%, and 150% volume.
| Production Volume | Revenue | Total Costs | Net Profit / Loss |
|---|---|---|---|
| 250 units (50%) | $12,500.00 | $20,000.00 | -$7,500.00 |
| 375 units (75%) | $18,750.00 | $22,500.00 | -$3,750.00 |
| 500 units (100%) | $25,000.00 | $25,000.00 | $0.00 |
| 625 units (125%) | $31,250.00 | $27,500.00 | $3,750.00 |
| 750 units (150%) | $37,500.00 | $30,000.00 | $7,500.00 |
Fixed costs divided by Contribution Margin per unit (Price minus Variable Cost).
$15,000 monthly fixed costs, $50 selling price, $20 variable cost.
Contribution Margin = $50 - $20 = $30. Break-Even Units = $15,000 / $30 = 500 units.
500 units ($25,000 in revenue) to break even
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