Skip to the tool
GCSEGeniusFree tools

Break-even calculator

Costs that stay the same whatever the output: rent, salaries, insurance.

Costs that rise with each unit: materials, packaging.

For the margin of safety and the profit at that level.

Break-even output

240 units

Contribution per unit
£7.50
Break-even revenue
£2,880
Margin of safety
80 units
Break-even chart
£0
£2k
£4k
£6k
0100200300400500Break-even 240
  • Total revenue
  • Total costs
  • Fixed costs

Working

  1. Contribution per unit = selling price − variable cost per unit = £12 − £4.50 = £7.50.
  2. Break-even output = fixed costs ÷ contribution per unit = £1,800 ÷ £7.50 = 240 units.
  3. Break-even revenue = break-even output × selling price = 240 × £12 = £2,880.
  4. Margin of safety = actual or budgeted sales − break-even output = 320 − 240 = 80 units.
  5. Profit at 320 units = revenue − total costs = 320 × £12 − (£1,800 + 320 × £4.50) = £600.

Your result

240 units. At 240 units, revenue of £2,880 exactly covers fixed and variable costs; every unit after that adds £7.50 of profit. At 320 units the profit is £600.

Learn break-even step by step

Start the free break-even lesson

GCSE Business Pro

Full refund within 14 days

£49 once

12 months of access

By paying you agree to our Terms and get access straight away, which ends your 14-day cancellation right. Your full refund within 14 days, for any reason, still applies.

No VAT is charged. Terms

Your mock plan, in three taps

Your subject
When do your mocks start?
Hours a week

A business with £1,800 of fixed costs, a £12 price and a £4.50 variable cost per unit breaks even at 240 units: break-even output is fixed costs ÷ (price − variable cost).

Questions people ask

What is the break-even formula?

Break-even output = fixed costs ÷ (selling price − variable cost per unit). The bottom line is the contribution per unit. With £1,800 of fixed costs, a £12 price and a £4.50 variable cost, the contribution is £7.50 and break-even is 1,800 ÷ 7.50 = 240 units.

How do you work out break-even revenue?

Multiply the break-even output by the selling price: 240 units × £12 = £2,880. At that point revenue equals total costs: £1,800 fixed plus 240 × £4.50 = £1,080 variable, £2,880 in all.

What is the margin of safety?

Margin of safety = actual or budgeted sales − break-even output. Selling 320 units with break-even at 240 gives a margin of safety of 80 units: sales could fall by 80 before the business makes a loss.

Do AQA students need the break-even formula?

No. AQA's specification asks you to read the break-even output and margin of safety from a break-even chart and to judge the method, and says you will not be asked to draw the chart or use the formula. Edexcel prints the formula and expects you to use it.

What happens to break-even if the price rises?

A higher price raises the contribution per unit, so fewer units are needed. At £13 instead of £12 the contribution is £8.50 and break-even falls from 240 units to 211.8, which rounds up to 212.

Keep going

How we work this out

What it does

Enter fixed costs, the selling price and the variable cost per unit to get break-even output and revenue, the margin of safety and the chart.

Break-even for one product at one price: the break-even output and revenue, the margin of safety and the profit or loss at a sales level, as in GCSE Business (Edexcel 1BS0 Appendix 3; AQA 8132 3.6.3).

Method

  1. Contribution per unit = selling price − variable cost per unit.
  2. Break-even output = fixed costs ÷ contribution per unit. A part unit is rounded up, because a business sells whole units and needs every cost covered.
  3. Break-even revenue = break-even output × selling price, the formula Edexcel prints.
  4. Margin of safety = actual or budgeted sales − break-even output.
  5. The chart draws total revenue, total costs and fixed costs against output; the lines cross at break-even.