KNOW THE MATH
How it works
This basic cost-volume-profit model assumes a single unit price and constant variable costs. It does not model product mix, taxes, step-fixed costs or capacity constraints. Use consistent currencies and time periods.
Formula
Contribution per unit = price − variable cost. Break-even units = ceiling(fixed costs ÷ contribution per unit).
Worked example
With 10,000 fixed cost, 50 price and 30 variable cost, contribution is 20 and break-even is 500 units.