Break Even Point (in units) Example

This video walks you through an example of how to calculate the Break-even Point in units.
To calculate the Break-even Point in terms of units, you divide the total fixed costs by the Unit Contribution Margin (the Unit Contribution Margin is the selling price per unit minus the variable cost per unit).
-
Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD.
Edspira’s mission is to make a high-quality business education accessible to all people.
-
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS & OTHER FREE GUIDES
* eepurl.com/dIaa5z
-
MICHAEL’S STORY
* www.edspira.co...
-
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: podcasts.apple...
* Spotify: open.spotify.c...
* Website: www.edspira.co...
-
CONNECT WITH EDSPIRA
* Website: www.edspira.com
* Instagram: / edspiradotcom
* LinkedIn: / edspira
* Facebook: / edspira
* Reddit: / edspira
*TikTok: / edspira
-
CONNECT WITH MICHAEL
* LinkedIn: / prof-michael-mclaughlin
* Twitter: / prof_mclaughlin
* Instagram: / prof_mclaughlin
* Snapchat: / prof_mclaughlin
*TikTok: / prof_mclaughlin
-
HIRE MCLAUGHLIN CPA
* Website: www.MichaelMcLa...

[@MrTilso]

Sweet, simple, and straight forward, I love it.

[@gabrielcolina5195]

This was such a big help, you are the goat.

[@MichaelOnRockyTop]

Thank you Edspira!

[@ExpatJoel]

why is it that when if you calculate the break even point in dollars, it does not add up correctly to the units sold? for example, 80,000 units is the break even unit amount. If you multiply that by the sale price, you get 320,000 (your theoreticcal break even point in dollars. But if you divide 240,000 by .25 (the contribution margin ratio) you get 960,000. those are two different break even dollar amounts. Why?

[@Edspira]

You have to use the contribution margin per unit, and not the contribution margin. This is where your difference is coming from.

[@AsadAli-gp5cv]

You are dividing 240,000 with the wrong percentage. Contribution margin ratio will always remain the same no matter what units you multiply the per unit prices to.
now taking this example, per unit contribution margin is 75% ( 3/4*100=75%)
now this contribution will remain the same no matter what level of activity the per unit is multiplied to.
SO If Break even sales (80,000*4)= 320,000
Break even V.C (80,000*1) = 80,000
Contribution margin = 240,000
Now CM ratio = CM/sales
SO 240,000/320,000*100= 75%
the 25% is the ratio for variable cost

[@eem0007]

Is the total fixed cost for the whole year?

[@jakecollier8999]

Awesome can't wait for more!

[@kwiyomi6111]

THANK YOU SO MUCH!!!

[@williamskey1047]

Dude just helped, thank you 😀

[@anshumanster]

you are awesome

[@bezeertorres]

An apics exam question!!!

[@ape8346]

No dislikes in 3 years just saying