From today's class lecture : I understanding about break event point.
Break Event Point: The break-even point is the number of units that you must sell in order to make a profit of zero
The Break Even Calculator uses the following formulas:
Q = F / (P − V) , or Break Even Point (Q) = Fixed Cost / (Unit Price − Variable Unit Cost)
Where:
Q is the break even quantity,
F is the total fixed costs,
P is the selling price per unit,
V is the variable cost per unit.
Example: Suppose a company produces and sells a product with the following values:
- Fixed Costs = $90,000
- Variable Cost Per Unit = $5
- Selling Price Per Unit = $20
In this example, the break-even point would be calculated as follows:
Q = $90,000 / ($20 − $5) = $90,000 / $15
Q = 8,000 units, the break-even point in unit sales is 6,000