Assumptions and method
Assumes a constant selling price and variable cost, no capacity steps and that all units are sold.
Test a scenario
Use the result in a decision
Use consistent currency, timing and price assumptions.
Assumes a constant selling price and variable cost, no capacity steps and that all units are sold.
Set a baseline and change one assumption to compare outcomes.
A worked example
Follow the fixed teaching example
- Unit contribution = 75 − 45 = 30.
- Break-even volume = 18,000 ÷ 30 = 600 units.
These illustrative inputs describe a project scenario, not a published benchmark. All monetary inputs use the same currency and price basis.
- Fixed cost
- 18000
- Price per unit
- 75
- Variable cost per unit
- 45
- Break-even volume
- 600 units
- Whole units needed
- 600 units
- Contribution per unit
- 30
Interpret the output only within the assumptions above. Changing the inputs changes the result; it does not validate the inputs.
Source & credit
Standard financial mathematics; no single inventor is asserted.
OpenStax: Principles of Finance, capital budgeting
This is independently written code and explanation of the underlying method. The linked publication, its diagrams and its trademarks remain its owner’s material; no permission to reuse them is implied.