Calculate break-even units
Calculate break-even units and interpret the margin of safety for a launch decision.
A workshop has $18,000 in fixed launch cost, a $420 seat price, and $120 variable cost per attendee. Expected demand is 72 seats. Break-even units = fixed costs / unit contribution The common shortcut is to divide fixed cost by price. That ignores variable cost and understates the number of units needed. Find unit contribution $420 price - $120 variable cost = $300 contribution per seat. Only the $300 left after variable cost can cover fixed cost and profit. Calculate break-even units $18,000 fixed cost / $300 contribution = 60 seats. At 60 seats, contribution exactly covers fixed cost. Compare…
Sign up free — one personalized lesson every day, matched to your role and goals.
Already have an account? Sign in