Calculating Your Break Even Point
Break-even analysis is used to determine when your business will be able to cover all its expenses and begin to make a profit.
The level of sales at which profit is zero is called the break-even point.
To calculate your break-even point, you will need to identify your fixed and variable costs.
Fixed costs are expenses that do not vary with sales volume, such as rent and administrative salaries.These expenses must be paid regardless of sales, and are often referred to as overhead costs.
Variable costs fluctuate directly with sales volume, such as purchasing inventory, shipping, and manufacturing a product.
The break-even point is when both variable and fixed expenses are fully covered.
Unit sales to break even = Fixed Expenses/(Unit selling price – Unit variable cost)
Dirham sales to break even = Unit sales to break even* Unit price
File Description: The file is a Microsoft Excel spreadsheet template.
Download this spreadsheet template just once, and be able to use it over and over again.
The spreadsheet contains formulas to help you calculate your break-even point.
Attachment: Break Even Calculator