How do I find the break-even point?

Question

So I'm confused with all the formulas.......where do I start?

Sales Price $5.00 per unit

Variable costs $3.25 per unit

Fixed costs $10,000

Units sold 25,000

How do I find the break even point in sales dollars? I'm frustrated and out of ideas..........could you please show me the formula?

Answer 1

The Sales Price is a distraction because it doesn't enter into the calculation of break-even cost.

To calculate the break-even point per unit divide the fixed cost by the number of units and add the variable cost per unit.  In your example  (10000/25000) + 3.25

Hope this helps

Jerry-the-bookkeeper

Answer 2

5.00X=10,000+3.25X

5.00X-3.25X=10,000

X=10,000/1.75

X=5714    Company needs to sell 5,714 merchandise to break even in sales dollars.