Break even point
Esme
Registered Posts: 711 Epic contributor 🐘
Hi,
Does anyone have a formula for calculating break even point in terms of sales revenue? The only way I can find in my book is by drawing a graph... which looks a bit complicated!
Thx in advance!
Does anyone have a formula for calculating break even point in terms of sales revenue? The only way I can find in my book is by drawing a graph... which looks a bit complicated!
Thx in advance!
0
Comments

Breakeven in Units Fixed costs/contribution0

Not sure if you needed them but heres the others i got from a very nice fello AATer
Management Account Formulas
Contribution Selling price per unitvariable costs per unit
Breakeven in Units Fixed costs/contribution
PV Ratio Contribution/sales price
Breakeven in Revenue Fixed costs/pv ratio
Margin of Safety in Units Forecastbreakeven
Margin of Safety % Margin of safety in units/forecast x 100
Target Profit Fixed costs + target profit/contribution0 
Thanks.. I've got the answer in units but also need to show it in terms of sales revenue?!0

So multiply breakeven in units by selling price to get breakeven in sales revenue.0

Most questions in the past have been written in a way that let you find the break even number of units and simply multiply that amount by the price per unit.
The standards would allow the examiner to present a profit and loss account for a business e.g. a restaurant or pub, and then ask for the breakeven sales revenue.
Restaurants sell a variety of products, so calculating breakeven in terms of units is not useful.
So take 2 steps Calculate the contribution % of the revenue. (Sales revenue less variable costs) divided by sales revenue. (Called the PV ratio, but I advise you to keep it as a decimal rather than converting it to a %)
 Then take the fixed costs and divide by the answer to 1.
This gives the Sales Revenue needed to break even.Sandy
sandy@sandyhood.com
www.sandyhood.com0 
Thanks Marknotgeorge and Sandy.. I was thinking it was much more complicated than it actually was!0
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