Fixed Cost =
Variable Cost =
Tax Rate = 0
Profit = 0
Calculates profitability. Breakeven (or break even) is the point at which expenses equal revenues.
To calculate, enter the data you know then select ? button on the row you don't.
- Fixed Cost: Fixed costs. These are costs that are not dependent on each unit sold. An example is rent -- whether 0 or 5000 units are sold, the rent will always be the same.
- Variable Cost: Variable cost per unit. These are costs that are dependent on each unit sold. For instance, shipping costs do not occur unless a unit is sold.
- Price: Price per unit. This is the price at which the product is sold.
- Tax Rate: Applicable tax rate as a percentage.
- Profit: Amount of profit determined or expected. Positive values are profits while negative ones are losses.
- Quantity: Number of units sold.
A startup company has $500,000 in operating expenses every month. It is introducing its first product, which costs $115 to produce. This product will sell to distributors for $245 per unit. Its tax rate is 40%. How many units must the company sell every month to cover its costs (break even)?
- Fixed Cost: 500,000
- Variable Cost: 115
- Price: 245
- Tax Rate: 40%
- Profit: 0
Select ? on Quantity row. The company needs to sell 3,847 units per month.