The breakeven analysis also known as the break-even point indicates a business makes sufficient amounts of money to cover all its costs. For a business to make a profit, it is beneficial to analyze how many units they will need to sell to recover the product cost.
Break even point formula
Breakeven point = Total fixed cost / (Selling price – Variable cost)
By dividing “total fixed costs” by the difference between “selling price per unit” and “variable costs per unit”, this formula calculates the “breakeven point” in terms of units. The result will be the number of units that must be sold to achieve the breakeven point.
Breakeven analysis excel
Where;
C5 represents the fixed costs.
C6 represents the selling price per unit.
C7 represents the variable costs per unit.
Formula = C5/(C6-C7)
This example shows that a business must sell at least “30 units” to achieve the breakeven point.