What is the breakeven point in number of units produced?

1 Answer | Add Yours

justaguide's profile pic

justaguide | College Teacher | (Level 2) Distinguished Educator

Posted on

The breakeven point is the number of units that have to be produced for the total cost of production to be equal to the total revenue earned by selling the products.

Let us take the total fixed costs to be F, the variable costs per unit to be V and the price of one unit be C.

If break even is achieved when n units are produced:

F + n*V = n*C

or n = F/(C - V)

If the fixed costs that are involved in the manufacture of products are high the break even is achieved when a higher number of total units are produced. Only after the breakevn number of number of units have been sold does the company actually start to make profits. The profit made on units produced after the breakeven point has been crossed is equal to the price - variable costs.

We’ve answered 318,025 questions. We can answer yours, too.

Ask a question